Home builders dive as market remembers they use Canadian lumber

(Paul Bersebach/Getty Images)

Homebuilders slump as lumber costs are poised to surge

Lumber is up on Canadian tariff threat.

2/3/25 12:02PM

With long-term interest rates falling Monday (which carries mortgage rates lower, too) one might expect homebuilders to be getting a lift in the market today, all else equal.

But, of course, all else is never equal, and the reason rates are down — a flight-to-safety trade set off by President Trump’s tariffs on Canada and (now delayed) Mexico — is also a reason that homebuilders are taking their lumps.

PulteGroup, D.R. Horton, Lennar, and NVR are all down, thanks largely to the fact that they’d be facing sharply higher lumber costs in the near term, thanks to the Trump administration’s announced tariffs. (Of course, who knows if or when the tariffs will go into effect — Mexico negotiated a monthlong pause by making some concessions on Monday.)

The National Association of Homebuilders had this to say Monday:

“More than 70% of the imports of two essential materials that home builders rely on — softwood lumber and gypsum (used for drywall) — come from Canada and Mexico, respectively.
Tariffs on lumber and other building materials increase the cost of construction and discourage new development, and consumers end up paying for the tariffs in the form of higher home prices.”

A Colorado mill owner told The Wall Street Journal that the tariffs are “going to make a vast swath of Canadian production unbuyable overnight,” he said. “Whatever lumber is available for sale today, I’m confident there will be less available for sale 90 days from now.”

Tasha Matsumoto, Nate Becker

15m

Stocks jump as Trump walks back European tariff threats

All sector ETFs traded higher in the broad-based rally.

Benny, the mascot for the Chicago Bulls, performs during a break between the Bulls and the New Orleans Pelicans at the United Center on January 14, 2017 in Chicago, Illinois.

Matt Phillips4h

Intel soars amid retail engagement, analyst chatter

Intel ripped toward a new 52-week high Wednesday, amid a flurry of activity in the options market and a couple of positive analyst assessments ahead of its earnings report due tomorrow.

Shortly after 11 a.m. ET, call options activity was roughly equivalent to the full-day average over the past 10 sessions. Bets on stock swings using call options have become a highly popular retail trade, suggesting that retail investors are getting interested in the shares ahead of the report from the partially nationalized American chip icon.

(That interpretation is buttressed by what we’re seeing on social sentiment-monitoring sites like SwaggyStocks, which at about 11:30 a.m. listed Intel as the fifth-most-mentioned stock on Reddit’s r/WallStreetBets forum over the past 24 hours.)

Wall Street analysts are also chattering about the stock, with RBC and Bernstein Research both writing about it in the last 24 hours.

RBC — which has a “sector perform” (or neutral) rating on Intel — said it expects a “slight beat and largely inline outlook” when the company reports after the close Thursday.

Bernstein’s Intel watchers — who have a “market perform” (also neutral) rating on the stock — seemed a bit more cautious, writing, “Overall numbers going forward still looking high to us. Fundamentals and valuation keep us sidelined.”

“If there is no memory, there’s no AI.”

FLASH FORWARD

ByMattPhillips

WedJan 212026

Matt Phillips6h

BNP upgrades Seagate on more durable cycle

Seagate Technology Holdings was up in early trading after analysts at BNP Paribas upgraded the shares to “outperform” from “neutral” and lifted their price target to $380 a share, implying a gain of almost 15% from where the stock is currently trading.

The maker of the somewhat stodgy technology known as hard disk drives — or HDDs in tech lingo — was one of the top stocks in the S&P 500 for much of last year as it was swept up in the AI data center trade.

Data centers need tons of storage capacity, and demand from hyperscalers has driven up prices and created shortages for disk drives, an industry that is dominated by a duopoly of Seagate and Western Digital. (BNP also maintained its “outperform” rating on WDC in a note Wednesday.)

The analysts at BNP say they pushed by the buy button on the stock after becoming more convinced that the upswing in sales was durable, writing:

“We have witnessed a structural shift happening in HDD industry, toward 1) an effective duopoly, 2) higher mix toward data centers, and 3) disciplined capex investments. These have supported our expectations of long-term, through-cycle profitability for the HDD industry. We are now upgrading Seagate from Neutral to Outperform as we are gaining greater conviction that robust data center storage demand could drive an upcycle longer than we initially expected. We think a secular re-rating of Seagate (as well as Western Digital) to over 20x is justified.”

Nate Becker7h

Stocks jump as Trump backs off European tariff threats, says “I won’t use force” to acquire Greenland

US President Donald Trump said he wouldn’t slap tariffs on several European countries after reaching what he called “the framework of a future deal” on Greenland with NATO’s secretary general.

Stocks extended their gains for the day on the news, having already been up earlier in the day when Trump said in a Davos, Switzerland, speech that he wouldn’t use force to acquire Greenland.

“Based upon this understanding, I will not be imposing the Tariffs that were scheduled to go into effect on February 1st,” Trump wrote on Truth social Wednesday afternoon. “Additional discussions are being held concerning The Golden Dome as it pertains to Greenland. Further information will be made available as discussions progress.”

Trump’s threats to acquire Greenland had put markets on edge in recent days, including a sharp drop on Tuesday.

Trump told a Davos crowd earlier Wednesday: “We probably won't get anything unless I decide to use excessive strength and force, where we would be frankly unstoppable, but I won’t do that... People thought I would use force. I don’t have to use force. I don’t want to use force. I won’t use force.”

He seemed to indicate that Denmark, which owns Greenland, could rebuff the US’s overtures to acquire the country without military retaliation.

“They have a choice. You can say yes and we will be very appreciative. Or you can say no and we will remember,” he said. Throughout his speech, Trump constantly reiterated his desire for the US to own Greenland.

The S&P 500 was up 1.5% while the Nasdaq 100 was up 1.7% as of 2:50 p.m. ET.