Stock Market Today, Oct. 13: Rate Pressures and Analyst Downgrades Weigh on Rocket Companies
Rocket Companies (NYSE:RKT), a fintech mortgage firm, closed at $10.83, down 0.37%. The stock fell to a new 52-week low amid concerns about mortgage demand and high borrowing costs. Analysts at JPMorgan and Morgan Stanley also lowered their price targets on the stock, adding to the pressure.
Trading volume reached 41.1 million shares, coming in nearly 32% above its three-month average of 31.2 million shares. Rocket Companies IPO'd in 2020 and has fallen 40% since going public.
How the markets moved today
S&P 500 closed at 7,805, down 0.02%, while the Nasdaq Composite finished at 27,204, down 0.15%. Among residential mortgage lending peers, UWM Holdings (NYSE:UWMC) closed at $1.03, up 0.98%, and loanDepot (NYSE:LDI) closed at $0.56, down 4.78%.
What this means for investors
Rocket Companies has had a rough year -- the stock is down 44% year-to-date as challenges in the housing market, particularly mortgage rate pressure, hit its bottom line. Last week, the average 30-year fixed mortgage rate reached 7.40%, its highest in almost three years.
If you're wondering whether its 52-week low is a good entry point, there are a few aspects to consider. Namely, mortgage rates remain a key headwind and are likely to remain high in the short term. Housing stocks are under the cosh, and there are no easy or quick solutions to the affordability crisis.
However, when market conditions improve, Rocket Companies could soar. It has been gaining market share and developing its artificial intelligence (AI) automations. In the past few years, it has acquired Mr. Cooper and Redfin, helping to diversify its business.
For patient investors who are comfortable with the risk, Rocket Companies could be worth a closer look. But it is a challenging sector, so pay attention to mortgage rates and the competitive environment.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Emma Newbery has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase and Rocket Companies. The Motley Fool has a disclosure policy.
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