Stock market news today: US stocks bounce back from worst day in months

JPMorgan analysts are getting more bullish on the homebuilding sector.

Analysts at the bank raised their December 2024 price targets on builder stocks amid investor enthusiasm for rate cuts from the Fed next year.

The target raises included large cap names like PulteGroup (PHM), which now has a $139 target, up from a previous $117, as well as Toll Brothers (TOL), which got a bump to $127 from $108. Smaller competitors like Meritage Homes Corporation (MTH) and Taylor Morrison Home Corporation (TMHC) were also among the names that saw increases.

The bank also raised the sector’s EPS estimates for 2024 and 2025 by 3% and 6%, respectively.

The updated projections come as homebuilder stocks have posted a major rally since November driven by a drop in rates and rising optimism that the Fed will rate cuts next year. At its most recent meeting, the central bank signaled that it would cut rates three times in 2024.

Builders have also benefited from a lack of inventory in the resale market.

“Ultimately, we believe the recent stronger rally in the sector (as well as the market) compared to the decline during the prior three months has been not only driven by the recent decline in interest rates, but also by investors greater certainty towards a more constructive market outlook for 2024, which includes the Fed beginning to cut rates midyear, along with the economy moderating but avoiding even a mild recession,” JPMorgan analyst Michael Rehaut wrote in a note to clients Thursday.

Shares of large cap homebuilder stocks are up more than 80% year to date, while shares of small cap builder stocks have increased more than 70%.

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