Stocks Higher With Monetary Policy Actions in Focus

U.S. stocks are moving higher in pre-market trading, following yesterday's third-straight 75-basis point rate hike from the Fed. Other central banks also are taking action, with the Bank of England and Swiss National Bank both hiking rates, while the Bank of Japan held its monetary policy stance unchanged but intervened in the currency markets for the first time in over 20 years to try to stabilize the falling yen. Housing is dominating the equity front, as Lennar Corporation and KB Home both topped earnings estimates, but the latter's revenues fell short of forecasts. In economic news, jobless claims came in lower than expected, while reports on leading indicators and regional manufacturing are due out after the opening bell. Treasury yields are mostly higher, and the U.S. dollar is subdued after yesterday's rally back to fresh multi-year highs. Crude oil and gold prices are trading higher. Asia finished broadly lower and Europe is mixed, with the global markets digesting recent monetary policy actions.

As of 8:56 a.m. ET, the December S&P 500 Index future is 23 points above fair value, the DJIA future is 67 points north of fair value, and the Nasdaq Index future is 74 points higher than fair value. WTI crude oil is gaining $1.52 to $84.46 per barrel and Brent crude oil is rising $1.48 to $91.31 per barrel. The gold spot price is increasing $17.30 to $1,693.00 per ounce. Elsewhere, the Dollar Index is little changed at 110.60.

Lennar Corporation (LEN $76) reported Q3 earnings-per-share (EPS) of $5.03, above the $4.81 FactSet estimate, with revenues increasing 29.0% year-over-year (y/y) to $8.9 billion, roughly in line with the Street's forecast. The homebuilder's new orders declined but its home deliveries were up y/y, while it continues to maintain a consistent housing starts pace and drive sales by adjusting pricing and incentives.

KB Home (KBH $28) posted Q3 EPS of $2.86, topping the forecasted $2.67, as revenues grew 26.0% y/y to $1.8 billion, slightly below the expected $1.9 billion. The homebuilder said its deliveries fell short of expectations due to extended build times and ongoing supply chain constraints, with rising mortgage rates, inflation, and ongoing macro concerns causing many prospective buyers to pause their homebuying decision. However, KBH said the long-term outlook for the housing market remains favorable.

The S&P 500 Index has remained choppy and has pulled back as of late with inflation pressures persisting and forcing the Fed to aggressively tighten monetary policy as discussed in the article, Stock Market Volatility: Inflation Strikes Again. Meanwhile, Schwab's Chief Investment Strategist Liz Ann Sonders discusses in her latest article, Earnings: Trampled Under Foot? how the bear market has been driven by multiple compression, making valuations look relatively compelling, but expected weakness in earnings may limit the upside potential for stocks.