What happened
Shares of Opendoor Technologies (OPEN 3.38%) were jumping today after the home-flipping expert got a boost from a Consumer Price Index (CPI) report that showed inflation continues to cool off. That's a boon to Opendoor because it makes it more likely that the Federal Reserve will pause its interest rate hikes at its meeting tomorrow, in line with its earlier forecasts.
As of 11:04 a.m. ET, the stock was up 13.7%.
So what
There was no company-specific news out on Opendoor today, but the business, which buys homes with the intent of selling them for a profit, is essentially a barometer for investor sentiment around the housing market, interest rates, and even the overall economy.
Over the last 15 months, the Fed has increased benchmark interest rates from near zero to over 5%, which has sent mortgage rates soaring in turn, crushing real estate tech stocks like Opendoor.
This morning's CPI report showed that inflation for all items rose 0.1% from April to May and core inflation, which excludes the volatile food and energy categories, increased 0.4%. Overall prices climbed 4% year over year, the slowest rate of inflation growth since March 2021, showing inflation continues to cool from its peak last June.
Now what
Most prognosticators expect the Federal Reserve to take a break from hiking rates at its meeting tomorrow. Previously, the Fed had said it expected the benchmark Fed funds rate to finish 2023 at 5%-5.25%, which is where it is now. If there are no more rate hikes this year, mortgage rates are unlikely to move higher, which should help support a rebound in home prices.
Opendoor has reported sharp losses in recent quarters, and the stock has been crushed by falling home prices and the slowdown in the housing market, but shares have bounced back recently as investors seem to be growing more optimistic.
The stock skyrocketed 91% last month and more gains could be in store if rates stabilize and the housing market begins to recover.
