Finimize - 📉 Down Lowe

What’s going on here?

Lowe’s gave investors a debrief on Tuesday, revealing a slimmer profit outlook on the back of worse-than-expected sales.

What does this mean?

High mortgage rates have squashed any Americans’ dreams of moving house, let alone having enough leftover cash to spruce up their new digs. That’s not what Lowe’s wants to hear, though. The home improvement retailer said with folk turned off DIY projects, same-store sales – that’s revenue excluding any shuttered or new stores – slipped more than 7% last quarter versus the same time last year. Investors weren’t expecting that, especially because rival Home Depot had reported better-than-expected sales just one week ago. Lowe’s made sure to keep expectations in check going forward too, adjusting its full-year revenue forecast to account for a drop in same-store sales that was almost double previous predictions.

Why should I care?

Zooming in: Your audience matters.

Home Depot’s relative success isn’t a total shock, though: professional contractors make up roughly half of the chain’s sales, about double what they do for Lowe’s. And while the state of the housing market is putting DIY-ers off home improvements, the pros are still working through project backlogs that built up over the last few years. That explains how Home Depot pulled off a dip in same-store sales that was less than half of Lowe’s.

For markets: Oranges are the cheapest stocking filler.

Lowe’s wasn’t the only retailer revealing struggles: electronics giant Best Buy blamed cash-strapped customers for its squashed sales forecast on Tuesday. See, now that US customers have bled their pandemic savings dry, they’re relying on disposable income to buy their nice-to-haves. Problem is, there isn’t much of that around these days. There’s a strong chance, then, that Americans will be downgrading their lists to Santa this year.

What’s going on here?

The main US stock index climbed its way out of a hole in record time.

What does this mean?

Stocks have historically notched higher over time, keeping pace with strengthening economies and company profit. That, though, is a fact easy to forget when markets are especially volatile and it seems as though stocks could plummet to undiscovered depths at a moment’s notice. Case in point: the S&P 500 index had dropped more than 10% between the summer and last month, with pessimistic pundits predicting that a new bear market had reared its head. Yet in just 16 trading days, the index broke a new recovery record to land only 5% shy of its all-time high. You know what they say: what goes down must come up.

Why should I care?

For markets: Grab your flip-flops.

It’s not just you: the last two years have been filled with extreme highs and lows. In fact, the S&P 500 has swung more than 10% in one direction 11 times since January 2022. That’s because investors are to-ing and fro-ing on whether inflation will come down to land safety without crashing economies, or stay relentless while economies suffer. Any evidence that makes them believe in one scenario will encourage them to buy stocks accordingly, and then one-eighty when the next update makes them change their minds.

For you personally: Keep your eyes on the prize.

If you have guts that even the spiciest taco couldn’t throw off, then you could use these swings to buy stocks when they’re down and sell them when they’re up again. But if you’re a mere mortal, that tactic may stop you from sleeping at night. Instead, then, you may want to sit tight on a well-diversified pot and trust in the market’s long-term prospects. After all, the S&P 500 managed to pull out profit upticks even over the last two years, and analysts are predicting a 12% pickup in company earnings next year too.