CHRIS VERSACE: Good morning, Action Alerts members. Stocks continue to rebound this morning from deeply oversold levels. But, as we noted in our opening comments to you this morning and in last Friday's roundup, the market faces technical resistance ahead. That, along with more disappointing retailer guidance out this morning, is likely to limit overall, near-term gains in the market. With that said, let's look at some of the retailers that reported this morning.
Now, to set that up, as you know, we've had our concerns about consumer spending giving several factors-- credit card debt levels and related interest rates, sizable auto loan payments, ongoing and seemingly persistent inflation, and of course, the resumption of student debt payments in October.
Target warned about all of that last week, reaffirming our view, of course. This morning, Macy's reported dismal comm sales for its July quarter, down 8.2%. And its bottom line guidance for the current quarter fell way, I mean, way short of expectations. At the same time, Dick's Sporting Goods also had some bad news as it slashed its full-year guidance, and that is weighing on the shares of Nike, Under Armor, and others this morning.
Now, against that backdrop, Coty's mixed-quarter results and revenue guidance for the coming year that matches consensus expectations isn't as bad as it may seem at first blush. And as we're thinking about Cody's shares, we want to remind you why we like the story long term.
First and foremost, the company sits at the intersection of luxury and consumable products. Those attributes have historically led to far better performance, especially in tougher times. Also though, management is leveraging its high-margin prestige business while moving into skin care, a new growth vertical for the company.
Coty also has longer term prospects, as we've discussed, in China and other markets, and balance sheet deleveraging that should continue over the coming quarters should drop increasingly more to the company's bottom line. Now, we'll have much more on Coty's-- excuse me-- Coty's quarterly earnings once we digest this morning's earnings conference call.
Now, with that said, let's look ahead at the rest of the week. And, of course, we have the usual things that we're tracking as we discussed yesterday with JD. We have the August flash PMI data. We have Fed Chair Powell in Jackson Hole, as well as earnings out of NVIDIA.
Now, before we get to all of that, however we made some updates to the bullpen yesterday. So let's dig into those starting first with Morgan Stanley. While Morgan Stanley shares passed through the $85 level we shared with you that we were watching, we wanted to update our thinking, and here is what it is.
We have yet to see a meaningful rebound in either the IPO or the M&A markets. However, there are some signs that we can start to see some improvement once we get into September and October.
However, following the 10% drop in Morgan Stanley's shares, there are several layers of technical resistance ahead for them. As such, we will need to see firm signs that the IPO and M&A market are indeed starting to rebound before we call Morgan Stanley shares up to the portfolio. In other words, more waiting for Morgan Stanley shares, but that is what the bullpen is for.
And finally, in case you missed it, we added Builders FirstSource shares to the bullpen yesterday afternoon. Over the last several weeks, we've shared with you that we've been looking for a potential play on what appears to be the stronger than expected housing market.
Builders derives about 80% of its revenue from housing construction, both single-family and multifamily, which makes it a very different company compared to United Rentals and Vulcan Materials, both of which tilt far more to nonresidential construction. As we see it, Builders, and it's who's who of homebuilders customer list, makes it a buy the bullets, not the guns position for the housing market and potentially for the portfolio.
Now, with 30-year fixed mortgages back up over 8%, however, we will want to make sure that the housing market truly has legs from here, and it's not simply a head fake in the making, before we call up Builder's shares to the active portfolio. Some signposts we'll be watching include Toll Brothers quarterly results after data today's close, and a bunch of fresh housing data later this week and next week as well.
Folks, that'll do it for today's rundown. JD and I will be back tomorrow to answer some of your biggest questions of the week.