Consumer Cos Rally on Mortgage Rate Hopes - Consumer Roundup

Consumer companies rose sharply as traders anticipated a drop in mortgage rates that would stir up housing-market activity.

Sales of previously owned homes in August fell 2.5% from the prior month to a seasonally adjusted annual rate of 3.86 million, the National Association of Realtors said Thursday. It was the fifth time sales have declined over the past six months.

"Since at least 1978, whenever the Federal Reserve finally starting easing, the 30-year mortgage rate returned to -- and actually declined below -- the effective rate of interest on outstanding mortgage debt," said Jim Paulsen, a veteran Wall Street strategist. "This happened when the Volcker Fed finally began easing in 1981, with Greenspan in 1989 and again in 2000, with Bernanke in 2007, and with Powell in 2019," Paulsen said.

If the current cycle follows the pattern of mortgage rates at that time, the strategist estimated that the average 30-year mortgage rate could fall from its current level at 6.2% to below 4%.

Cracker Barrel Old Country Store shares slipped after the rustic-themed restaurant and retail chain's fiscal fourth-quarter earnings fell short of estimates.

Davide Campari -Milano's controlling shareholder Lagfin said it plans to buy shares in the Aperol maker valued at up to $111.2 million.

Target hired Pepsico executive Jim Lee as chief financial officer and a member of leadership team.

Olive Garden owner Darden Restaurants struck a delivery deal with Uber Technologies, betting that shuttling pasta and breadsticks to diners at home can help reverse flagging sales as consumers spend less at restaurants.

Next raised its projection for the second time this year on strong sales and said it would expand overseas, sending shares of the U.K. retail bellwether to a record high before paring most of the gains.

Write to Rob Curran at rob.curran@dowjones.com

(END) Dow Jones Newswires

September 19, 2024 17:04 ET (21:04 GMT)

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