It’s been a nerve-wracking August for investors.
After the Federal Reserve closed July by maintaining the benchmark Fed funds rate at 5.25% to 5.5%, where it’s been for over a year, investors have been clamoring for a do-over.
The S&P 500 plunged 6% over the first three trading days of August as a raft of downbeat economic data convinced investors that the economy was weakening faster than expected and the Fed had erred in not lowering rates.
Stocks plunged on Monday as a surprise interest rate hike in Japan led to the unwind of a global “carry trade” in which investors had borrowed low-interest yen to invest in risky assets in the U.S. like the “Magnificent Seven” stocks.
As a result of the sharp three-day sell-off, economists now expect the Fed to cut rates by 50 basis points in its September meeting and at least another 50 basis points before the year’s over.
The economy is likely to remain uncertain, but one thing is clear. Lower interest rates will help to revive a struggling housing market, breathing new life into stocks that depend on real estate transactions.
That industry has been hit hard by the slowdown in the housing market, but a turnaround could be near. One stock that could soar in the recovery is Compass (NYSE: COMP), the nation’s No. 1 real estate brokerage by sales volume.
Image source: Getty Images.
Can Compass get back on track?
Compass went public in the spring of 2021 when the real estate market was booming, and mortgage rates were around 3%. However, that boom did not last long, and by the time 2022 rolled around, revenue was sliding, and the stock was flailing.
With the housing market remaining on ice, Compass has focused on realigning its cost structure, investing in technology, and growing its base of agents, which has helped drive revenue higher even in a challenging market.
Revenue increased 14% to $1.7 billion in the second quarter, and Compass’s number of principal agents rose 24% to nearly 17,000 as it’s luring new agents with an attractive technology platform and a steady marketing push. After two years of declines in total transactions,…
..
