The economy typically has three leading industries that investors can watch closely when trying to figure out the potential future of the stock market. Of course, consumer discretionary is a big part of this mix, as the United States economy is increasingly made up of consumer trends and debt. Following these consumer trends is the mortgage market, which is an extension of the real estate sector.
A third industry just as connected to the rest is the transportation sector, particularly the trucking industry, as it is called upon to deliver the products ordered based on higher consumer activity and demand.
Today, investors have a good idea of what the consumer sector is doing after consumer sentiment readings came in at their weakest since 2021, so now it is time to gauge the housing market.
This is where homebuilding stocks like KB Home (NYSE: KBH) become as important as ever, especially as the company just announced its latest set of quarterly earnings figures.
Investors can probably guess that the figures weren't that great based on the fact that the stock traded lower by 5.3% the day after announcing its quarterly earnings, but the implications for the rest of the stock market are just as important.
Why the Housing Industry Could Be in Trouble: KB Homes Stock Numbers Follow the Trend
Investors can gauge the market's feelings about a particular industry by comparing its average forward P/E valuations against the broader S&P 500 index. In this case, those at Goldman Sachs believe the S&P 500 will trade at about 18.0x forward P/E ratio for the next 12 months, the benchmark for investors ...
