With interest rates on the rise, attention has increasingly focused on the housing market, which has been in the grips of a slowdown since its postpandemic surge.

Fresh signs of trouble come from Compass COMP, whose shares are tumbling in premarket after the real-estate brokerage and tech provider slashed its annual revenue guidance and revealed cost-cutting plans, citing a slowing market.

Here’s a chart showing the rough ride for shareholders since Compass’s spring 2021 debut from blogger Wolf Street, who warns the end is nigh for the company based on how fast it has been burning cash:

And a new report from Redfin RDFN revealed 63,000 home-purchase agreements fell through in July — 16.1% of the homes that went under contract in the month — marking the highest percentage on record, apart from March and April of 2020. 

What’s a wary real-estate investors to do? Our call of the day from Nuveen’s chief investment officer Saira Malik anticipates “neither a bubble nor bottom” for the market, but says defense is the smartest play right now when to comes to this market.

“Deteriorating home builder and consumer sentiment, higher mortgage rates, historically low affordability, declines in housing starts and building permits, and record-low inventories of existing homes for sale, among other factors,” will have implications for the housing sector and broader economy, Malik wrote in a commentary Monday.

“But in our view they’re not evidence of a housing bubble that’s due to burst” with demand still healthy, she said.

Still, plenty of pain remains for renters as prices continue to soar, and with higher home prices and rental costs, Americans will curb spending on goods and services, eventually hitting corporate earnings and keeping markets volatile, said Malik.

Real-estate investors need to stay “well-positioned, especially if their sector and regional exposures are aligned with prevailing demographic and supply/ demand trends. Builders are still playing catch-up from the global financial crisis, with housing starts still above trend. This reinforces longer-term price stability in the sector and supports our constructive outlook,” she added.

Also, she advises staying defensive through dividend growth stocks that are often higher quality and derive more of total return from dividends instead of price appreciation.

On the data front, U.S. housing starts fell in July to lowest level since early 2021, following another drop in builder confidence on Monday. An update on existing-home sales is due later in the week.

Read: This stock-market milestone indicates the S&P 500 could be as much as 16% higher one year from today

The markets

Stocks DJIA SPX COMP are flat to lower as trading kicks off, with bond yields BX:TMUBMUSD02Y BX:TMUBMUSD10Y inching up and oil prices CL BRN00 rebounding slightly, following the weakest day in over a month that was driven by sluggish China data. Bitcoin BTCUSD is trading just under $24,000.

The buzz

Following a profit warning last month, retailing giant Walmart WMT has beat earnings expectations, and shares are up. Home Depot HD also recorded a profit beat with record sales, but the stock is down.

Merck MRK and Orna Therapeutics will collaborate in a deal to discover and develop programs including vaccines, allowing the latter up to $3.5 billion in milestone payments.

Signs of more Big Tech fallout from a slowing global economy, with Apple AAPL reportedly laying off about 100 contract workers. Also, Apple wants workers to return to the office three days a week.

In One Chart: Life in America is getting back to ‘normal,’ except when it comes to the office

Warren Buffett’s Berkshire Hathaway BRK BRK boosted stakes in Amazon AMZN, while selling GM GM over the past quarter, according to filings that rolled in Monday from hedge and investment funds. Elsewhere, Paulson & Co., the hedge fund run by John Paulson, exited Exxon Mobil XOM and SPDR Gold ETF GLD. George Soros’s investment fund bought Tesla TSLA and Ford F stakes, adding to Lucid LCID and NIO NIO, and Ray Dalio’s Bridgewater picked up Rivian RIVN and Amazon.

On the data front, building permits and housing starts will be released at 8:30 a.m. Eastern, followed by industrial production and capacity utilization.

President Joe Biden will sign the Democrats’ landmark climate change and healthcare bill on Tuesday. 

Best of the web

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A Spanish fashion billionaire’s family investment firm is investing in renewable energy.

The chart

Bank of America has released its monthly global fund manager survey. Among the findings, the net percentage of investors who expect growth will beat value in the next 12 months has turned positive for the first time since August 2020:

Bank of America

Read: Fund managers are no longer ‘apocalyptically bearish,’ BofA says after latest poll

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m. Eastern Time:

Ticker Security name
BBBY Bed Bath & Beyond
TSLA Tesla
AMC AMC Entertainment
GME GameStop
MEGL Magic Empire Global
AAPL Apple
NIO NIO
AMZN Amazon
MULN Mullen Automotive
BBY Best Buy
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