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Here’s what you need to know today…

1. Americans increased their spending in July.

2. US manufacturing businesses are still struggling.

3. Home prices might drop further from here.

S&P 500: 4,437.86
1Mo: -2% | 1Yr: +3% | 5Yr: +56%

The market stumbled lower today as investors debated the future of the economy. Americans are still spending a lot, and economic forecasts are high, sparking fears about an upsurge in inflation.

Americans increased their spending in July, another sign that the economy is holding up better than expected. The Commerce Department reported retail sales jumped 0.7% in July, driven by a surge in online shopping, restaurant visits, and spending at sporting goods stores. Spending increased across most categories.

US manufacturing has been struggling for months. The New York Federal Reserve’s measure of factory activity turned negative in August as new orders and shipments dropped. However, manufacturers reported feeling more optimistic than they have all year.

Homebuilders are losing optimism as expensive mortgage rates deter home buyers. The National Association of Home Builders confidence index dropped unexpectedly in August. More home builders reported cutting prices to attract buyers, and lower optimism could translate to even lower home prices.

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• Amazon’s climate goals denounced as weak and ineffective by SBTi

• Home Depot sales drop as homeowners cut back

• AMC plans a reverse stock split despite investor pushback [🤓]

• Zoom changes its AI policy after customer backlash

• PayPal finds a new CEO

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Why split or reverse-split your stock?

A stock split is when a company breaks its ownership into more pieces. It's mostly cosmetic but gets people talking about the stock. Where you owned one share, you now might own twenty. But the value does not change. If you owned one $2,000 share, but now you own twenty $100 shares, you still own $2,000 of the company, which equates to some percentage ownership.

As the company grows, your slice grows. It doesn't matter whether your percentage includes two shares or 13.562 shares. Some might say reducing the price makes it more affordable for investors with less money, but remember, fractional shares exist. You can buy any nearly stock for nearly any amount. Also, most people for whom that price/share amount would matter are investing through funds anyways. Smaller share prices do give the company more flexibility if they're paying employees in stock.

Companies may opt for a reverse stock split, turning 10 shares into 1, if they decide that they’ve cut their company into too many pieces. This typically happens when a company is in financial trouble and sells as many shares as it legally can to try and raise more investment. After that, they need to get approval to issue more shares.

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