Coffee With Greta: Retail Shocks Boost Stocks
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: +167 (+0.5%) SPX Futures: +17 (+0.4%) NASDAQ Futures: +14 (+0.1%) Good morning friends! Futures are higher following a string of strong retail earnings. Let’s get right to it! Macy’s Surges On Earnings Beat, Strong Outlook Macy’s (M) shares are up 13.5% ahead of the open after beating fiscal Q1 expectations and raising its full-year profit outlook. The department store chain reported adjusted earnings of $1.08 per share on $5.35 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $0.82 on $5.33 billion in revenue. Macy’s CEO said, “While macroeconomic pressures on consumer spending increased during the quarter, our customers continued to shop.” Like Nordstrom, Macy’s said it saw an increase of customers shopping for special occasions like weddings. The company now expected adjusted fiscal 2022 earnings of $4.53 to $4.95 per share, up from the prior forecast for $4.13 to $4.52. Macy’s forecast revenue to be flat to up to 1% compared to 2021, which would be between $24.46 billion to $24.7 billion. Dollar Tree Pops After Lifting Forecast Dollar Tree (DLTR) shares are rising 15.9% in premarket trade after reporting better than expected Q1 earnings and lifting its guidance. The discount store reported adjusted earnings of $2.37 per share on $6.9 billion in revenue. That topped analysts’ expectations for adjusted EPS of $2.00 on $6.8 billion in revenue. Same-store sales jumped 4.4% year-over-year vs analysts’ expectations for 2.2% growth. Dollar Tree’s CEO said, “We are taking the necessary actions now to position ourselves for accelerated growth in what I view as the most attractive sector in retail, especially in the current economic environment. Value and convenience are more important than ever to our shoppers and the communities we serve.” The company forecast consolidated net sales will range from $27.8 billion to $28.1 billion this year, up from previous guidance for $27.2 billion to $27.9 billion. Dollar General Jumps On Upgraded Guidance Dollar General (DG) shares are up 11.6% ahead of the open after beating Q1 expectations and hiking its full-year guidance. The discount retailer reported fiscal Q1 earnings of $2.41 per share on $8.75 billion dollars. That was better than analysts’ estimates for EPS of $2.32 on $8.71 billion in revenue. Sales rose 4.2% year-over-year while cost of sales jumped 6.5%. Dollar General maintained its full-year earnings growth guidance at 12% to 14% but raised its same-store sales growth forecast to 3% to 3.5% from 2.5%. The company expects total sales growth of 10% to 10.5%. Dollar General also announced it will repurchase $2.75 billion worth of its shares this year. Nvidia Tumbles On Weak Guidance Nvidia (NVDA) shares are down 4.3% in premarket trade despite beating fiscal Q1 expectations. The chipmaker reported adjusted earnings of $1.36 per share on $8.29 billion in revenue. That topped analysts’ expectations for adjusted EPS of $1.29 on $8.11 billion in revenue. Total sales rose 46% year-over-year with data center sales surging 83% and gaming sales rising 31%. But Nvidia’s outlook was weak. The company forecast fiscal Q2 revenue of $8.1 billion, lower than analysts’ estimates of $8.54 billion. Nvidia’s CEO said the company is facing a “challenging macro environment”. Snowflake Drops On Disappointing Outlook Snowflake (SNOW) shares are tumbling 11.3% ahead of the open after issuing weak guidance for the current quarter. The cloud software company reported a fiscal Q1 loss of $0.53 per share on $422 million in revenue. That was worse than analysts’ expectations for a loss of $0.52 per share but beat revenue estimates of $414 million. $394 million of that was product revenue vs analysts’ expectations for $389 million. Snowflake forecast fiscal Q2 product revenue will be between $435 million and $440 million. Analysts were estimating $440 million. Broadcom to Buy VMware in $61 billion Deal VMware (VMW) shares are up 1.4% in premarket trade after Broadcom (AVGO) announced plans to buy the company in a $61 billion deal. That transaction will be a mix of cash and stock based on Broadcom’s share closing price on May 25. Broadcom is purchasing VMware to diversify its business into enterprise software. VMware’s products are used by enterprises for their servers and cloud servers. AVGO shares are down 0.4% ahead of the open. Elon Musk Ups Personal Commitment In Takeover Bid Twitter (TWTR) shares are up 4.7% ahead of the open after Elon Musk revealed he is planning to fund more of his takeover bid for the company. A new SEC filing shows Musk has increased his personal equity commitment to $33.5 billion. That’s $6.25 billion higher than his previous commitment. The filing also said Musk no longer plans to take out a margin loan against his Tesla (TSLA) stock. He is in talks with Twitter shareholders, including founder and former CEO Jack Dorsey, for additional financing. Weekly Jobless Claims Slip Weekly jobless claims fell more than expected as the U.S. labor market remains tight. The Labor Department reported 210,000 Americans filed initial claims for unemployment benefits last week. That was down 8,000 from the previous week and better than expectations for 215,000. Continuing claims rose unexpectedly by 31,000 to 1.35 million in the week ending May 14. Q1 GDP Contraction Revised Higher The U.S. economy contracted more than originally estimated in the first quarter. The Commerce Department released its first revision of Q1 GDP today, showing a 1.5% annual contraction. That’s an increase from the original estimate of 1.4% and higher than economists’ expectations for the revision to be lower at 1.3%. The Congressional Budget Office boosted its GDP growth estimates on Wednesday. The CBO now sees the U.S. economy expanding 3.1% in 2022, with 2.2% growth in 2023, and 1.5% in 2024. The group also believes inflation will be at 4.7% by the end of this year, 2.7% in 2023, and 2.3% in 2024. The CBO believes the Fed will raise the federal funds rate
Continue Reading -->Coffee With Greta: Nordstrom Bucks the Nasty Retail Trend
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -133 (-0.4%) SPX Futures: -14 (-0.4%) NASDAQ Futures: -49 (-0.4%) Good morning friends! Futures are slipping as traders digest a fresh batch of earnings and anticipate the release of the Fed minutes. Let’s get right to it! Nordstrom Rallies On Upgraded Guidance Nordstrom (JWN) shares are up 5.4% ahead of the open after beating Q1 sales expectations and hiking its full-year outlook. The retailer reported an adjusted loss of $0.06 per share vs analysts’ expectations for $0.05. Nordstrom’s $3.57 billion in revenue topped expectations for $3.28 billion. Net sales at Nordstrom rose 23.5% year-over-year, surpassing pre-pandemic levels. Nordstrom Rack sales rose 10.3% and were still below 2019 levels. CEO Erik Nordstrom said the company has been able to capitalize on higher demand from those shopping for “long-awaited occasions” like weddings. That higher demand prompted Nordstrom to raise its full-year outlook, bucking the recent trend of other retailers like Target (TGT) and Kohl’s (KSS). The company now expects 2022 revenue growth of 6% to 8% vs previous guidance for 5% to 7% growth. Nordstrom expects full-year adjusted earnings to range between $3.20 to $3.50 per share. Dick’s Sporting Goods Sinks After Cutting Outlook Dick’s Sporting Goods (DKS) shares are falling 11.2% in premarket trade despite beating Q1 expectations. The sporting goods retailer reported adjusted earnings of $2.85 per share on $2.7 billion in revenue. That was better than analysts’ expectations for adjusted EPS of $2.48 on $2.59 billion in revenue. But Dick’s cut its full-year outlook as the company struggles with high costs and supply chain issues. The retailer now expects adjusted full-year earnings to be between $9.15 and $11.70 per share vs the previous forecast for $11.70 to $13.10. Analysts were expecting an outlook for EPS of $12.56. Dick’s forecast same-store sales will be down 2% to 8% annually vs prior expectations for a decline between 0% and 4%. Express Jumps On Upbeat Guidance Express (EXPR) shares are rallying 11.3% ahead of the open after reporting a narrower Q1 loss than expected. The clothing retailer reported an adjusted loss of $0.10 per share on $450.9 million in revenue. That beat analysts’ expectations for a loss of $0.13 on $436 million in revenue. Same-store sales rose 31% year-over-year vs expectations for a 26.8% gain. Express forecast same-store sales will rise in the mid-single digits in Q2. The company expects same-store sales to rise 8% to 10% for the full-year vs analysts’ estimates of 8%. Express issued full-year earnings guidance for $0.24 to $0.34 per share vs the consensus estimate for $0.12. Intuit Rises On Strong Earnings Intuit (INTU) shares are up 1.1% in premarket trade after beating fiscal Q3 expectations and hiking its full-year guidance. The tax filing software maker reported adjusted earnings of $7.65 on $5.63 billion in revenue. That topped analysts’ expectations for adjusted EPS of $7.54 on $5.51 billion in revenue. The CEO said, “We had another strong quarter, and we are raising Intuit’s revenue and operating-income guidance for fiscal-year 2022.” Intuit expects fiscal Q4 revenue to fall 8% to 9% annually due to the earlier tax filing deadline this year compared to last. The company forecast full-year revenue between $12.63 billion and $12.67 billion, up from prior guidance for $12.17 billion to $12.3 billion. Intuit expects full-year adjusted EPS to range between $11.68 and $11.74 vs previous guidance for $11.48 to $11.64. Wendy’s Rallies On Potential Takeover By Largest Shareholder Wendy’s (WEN) shares are rising 9.5% ahead of the open after a filing revealed its largest shareholder is exploring a potential deal with the company. In an SEC filing, Trian Partners said it is seeking a deal that “can generate or enhance shareholder value.” Trian owns a 19.4% stake in Wendy’s. The hedge fund said, “Such a potential transaction could include an acquisition, business combination (such as a merger, consolidation, tender offer or similar transaction) or other transaction that would result in the acquisition of control of” Wendy’s. Trian said it has already begun discussions with the board and plans to continue those talks. The fund holds three seats on the Wendy’s board of directors. Lyft Sinks On Plan to Slow Hiring Lyft (LYFT) shares are down 0.2% in premarket trade after the company announced plans to slow hiring. Lyft president John Zimmer made that announcement in a memo to staff late Tuesday. A company spokeswoman said in a statement, “We’re focused on accelerating profitable growth. We’re also being responsible about costs and will significantly slow hiring.” In addition to a hiring pause, Lyft is also reducing the budget of some departments and granting new stock options to some employees to make up for its plunging share price. Rival Uber (UBER) shares are following LYFT in premarket trade, falling 0.3% ahead of the open. Uber previously announced its own plans to slow hiring and cut its spending on marketing, as it focuses on turning a profit. Oil Prices Rise On Tight Supply, High Demand Concerns Oil prices are rising on tight supply concerns as the U.S. enters its peak driving season. West Texas Intermediate crude futures are up 1.1% to $111 bbl while Brent crude futures are rising 0.9% to over $114 bbl. The American Petroleum Institute reported Tuesday that U.S. gasoline stockpiles fell by 4.2 million barrels last week. Those stockpiles are at the seasonally lowest level since 2014. The French foreign minister also said Tuesday was optimistic about the EU securing a deal to ban Russian oil imports. Gas Prices Hit 16th Straight Record-High U.S. gas prices hit a new record high for the 16th straight day today. AAA shows the national average for regular rose to $4.599/gal overnight. Diesel prices are continuing to cool, slipping to $5.544/gal today. The Energy Secretary said Tuesday that the President has not ruled out using export restrictions to ease high gas prices in the U.S. Bill Ackman Slams
Continue Reading -->Prepare for a Rally
The market rallied hard at the end of the day on Friday, leaving a big bottoming tail on the day’s candle. But does Sami think that that means we’ve hit the bottom? Find out what he’s watching to understand the market’s future direction, and what he’s expecting to see this week. In this video, Sami explains: – Why ADI is the only stock of its kind – How he handles uncooperative trades – The changes he’d make to his strategy if he knew the market had bottomed – What sets AUY apart from other gold stocks – Which gap showed up in BROS
Continue Reading -->Coffee With Greta: Snap Collapses on Awful Guidance
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -203 (-0.6%) SPX Futures: -42 (-1.1%) NASDAQ Futures: -204 (-1.7%) Good morning friends! Futures are lower as traders digest a sales warning from a major social media company plus more disappointing retail earnings. Let’s get right to it! Snap Tanks On Q2 Sales Warning Snap (SNAP) shares are plummeting 33.2% ahead of the open after warning it will miss its own revenue and EPS expectations in the current quarter. The company filed an 8-K with the SEC, saying “the macroeconomic environment has deteriorated further and faster than anticipated” since releasing guidance on April 21. The filing said, “we believe it is likely that we will report revenue and adjusted EBITDA below the low end of our Q2 2022 guidance range.” In a letter to employees, CEO Evan Spiegel also said Snap will slow hiring as they work to lower costs. Spiegel said the company will still recruit new employees and he expects to hire 500 more before the end of the year. That’s a slowdown from the 2,000 employees Snap has hired over the past 12 months. The Snapchat parent company is the latest tech company to slow hiring this year, following the lead of giants like Meta Platforms (FB) and Twitter (TWTR). In a letter to employees, CEO Evan Speigel said the social media company will also slow hiring through the end of 2022. Best Buy Slips On Earnings Miss, Downgraded Outlook Best Buy (BBY) shares are slipping 2.5% ahead of the open after missing Q1 profit expectations. The retailer reported adjusted earnings of $1.57 per share vs expectations for $1.61. $10.65 billion in revenue was better than expectations for $10.41 billion. Best Buy’s same-store sales fell 8% year-over-year, better than analysts’ expectations for an 8.6% decline. The CEO said the economic backdrop has worsened since its investor day and “as a result, we are revising our sales and profitability expectations for the year.” The company forecast full-year revenue between $48.3 billion and $49.9 billion, down from its previous outlook from $49.3 billion to $50.8 billion. Best Buy expects same-store sales to drop between 3% and 6% vs the previous forecast for 1% to 4%. Full-year adjusted earnings are now expected to range between $8.40 and $9.00 per share compared to the prior outlook for $8.85 to $9.15. Abercrombie & Fitch Plunges On Unexpected Q1 Loss Abercrombie & Fitch (ANF) shares are plunging 27.8% in premarket tradea after reporting an unexpected loss in fiscal Q1. The clothing retailer reported an adjusted loss of $0.27 per share vs analysts’ expectations for earnings of $0.08 per share. The company’s $813 million in revenue beat estimates of $799 million. Sales rose 4% year-over-year. The company blamed the profit loss on higher freight and product costs in the quarter. Abercrombie slashed its full-year sales outlook, now expecting year-over-year growth to be flat to up to 2%. The company previously forecast sales growth between 2% and 4% this year and analysts’ were expecting 3.5% growth. Zoom Jumps on Earnings Beat, Strong Guidance Zoom (ZM) shares are up 3.4% in premarket trade after beating Q1 earnings expectations and issuing strong Q2 guidance. The video chat company reported adjusted earnings of $1.03 per share on $1.07 billion in revenue. That was better than analysts’ expectations for $0.87 in EPS and in-line with revenue estimates. Revenue jumped 12% annually last quarter. Zoom forecast Q2 revenue between $1.115 billion and $1.12 billion, which would be up 9.2% year-over-year. Analysts were estimating 8.7% growth to $1.1 billion. The company forecast Q2 EPS between $0.90 to $0.92 vs analysts’ expectations of $0.87. For fiscal 2022, Zoom is expecting revenue between $4.53 billion and $4.55 billion, in-line with expectations. The company sees full-year earnings ranging between $3.70 and $3.77 per share, better than estimates for $3.53. Oil Prices Flat Amid Recession Fears Oil prices are slightly higher amid concerns about a recession and Covid restrictions in China. West Texas Intermediate crude futures are up just 0.1% to over $110 bbl while Brent crude futures are rising 0.2% to over $113 bbl. Beijing is ramping up quarantine restrictions while Shanghai’s lockdown is due to be lifted soon. Although energy traders are worried a recession in the U.S. will cause a decrease in demand, fuel demand remains high now ahead of Memorial Day weekend. Gas Prices Hit 15th Straight Record-High U.S. gas prices hit a new record high for the 15th straight day today. AAA shows the national average for regular rose to $4.598/gal overnight. Diesel prices are continuing to cool, slipping to $5.549/gal today. The national average for a gallon of regular has not fallen for nearly a month. The price has either risen or remained flat every single day since April 24. The average is over $4/gal in every single U.S. state. U.S. Business Activity Expected To Slow S&P Global releases its May purchase managers index for both the services and manufacturing sectors at 9:45 a.m. ET. The manufacturing PMI is expected to fall to 58 this month from 59.2 in April. While the services PMI is expected to drop to 55.4 from 55.6. Any reading above 50 still signals an expansion in business activity. But both manufacturers and service providers have struggled in recent months with rising costs as inflation remains elevated. New Home Sales Expected To Fall The Census Bureau reports new home sales for April at 10:00 a.m. ET. That report is expected to show sales fell to a seasonally adjusted annual rate of 750,000 units last month vs 763,000 in March. Last week, the government reported an unexpected slowdown in housing starts in April. Builders say they’re seeing a drop in demand as rising mortgage rates pile on top of high costs. In Case You Missed It The Fed’s 2021 Survey of Household Economics and Decisionmaking found Americans were already worried about the economy before inflation surged
Continue Reading -->Scott Redler’s Dog Bytes: Tech Sector Lows
SPX futures are +33, giving some upside follow-through to Friday’s reversal. We’ll see if it holds or fades. 3945-3970 is some resistance. See if tech holds or fades after many leaders broke hard last week.TSLA changed character on April 21 after earnings. The strong report got sold. Then the $973 break confirmed the new active bearish sequence. TSLA also lagged the bounce. On Friday, I made money short. It broke $700 to see $633 before a weak bounce with the indices. I did buy some $620 puts into the end-of-day bounce. TSLA isn’t up much considering the futures strength. I’ll be watching this carefully. AAPL helped lead the indices to the lows last week. We did well short here. I covered on Friday. I’m not sure how it will respond to market strength. Resistance is now in the $140.78-$141.60 area. AMD is very choppy and just gives two-way action based on the futures. It didn’t make a new low Friday but it hit the $88 area. It’s red while futures are up. See how it reacts today. I’m not in a rush to do anything here. NVDA is also red. But it hasn’t been special for months and has been trending lower. $155-$157 is the recent low area heading into Wednesday’s earnings.Positions Disclosure as of 5/23/2022 at 8:55 a.m. ET
Continue Reading -->Coffee With Greta: Traders Just Bought The Dip
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: +308 (+1%) SPX Futures: +35 (+0.9%) NASDAQ Futures: +70 +(0.6%) Good morning friends! Futures are higher as markets attempt to bounce back from an intense sell-off. Let’s get right to it! Traders Just Bought the Dip with More Retail Earnings Ahead Traders are attempting to recover some of the recent losses after an intense sell-off on Wall Street. The S&P 500 is still hovering just above a bear market after briefly dropping into that territory on Friday. The Dow logged its first 8-week losing streak since 1932 last week. The Nasdaq and the S&P have both fallen for 7 straight weeks for the first time since 2001. But the market will have a close eye on a slew of retail earnings this week after disappointing results from Target (TGT) and Walmart (WMT) last week. Best Buy (BBY) and Nordstrom (JWN) are up first on Tuesday. And then Costco (COST), Dollar Tree (DLTR), Dollar General (DG), and Macy’s (M) report earnings on Thursday. More bad retail results could prompt a further selloff after Target and Walmart’s earnings showed consumers shifting their spending habits due to inflation. Other key earnings this week include Zoom (ZM), Intuit (INTU), Nvidia (NVDA), and Alibaba (BABA). Key Economic Data This Week There’s no economic data on the schedule today but traders have their eyes on some key reports this week. The S&P Global May manufacturing and services PMIs will both be released Tuesday morning while the Census Bureau is set to report new home sales for April. Then on Wednesday, the Commerce Department reports durable goods orders and core capital equipment orders for April and the Fed releases the minutes of its May meeting. The Commerce Department releases its first revision of Q1 GDP growth on Thursday while the National Association of Realtors reports pending home sales for April. And Friday it’s all about inflation with the Bureau of Labor Statistics set to release the April personal consumption expenditures price index. Oil Prices Rise On High Demand, Tight Supply Oil prices are rising today amid high demand for fuel in the U.S. and tight supply of oil. West Texas Intermediate crude futures are up more than 1% to over $111 bbl while Brent crude futures are rising 1% to nearly $114 bbl. The U.S. is heading into its peak driving season, which typically begins Memorial Day weekend and ends on Labor Day. Even as gas prices have hit record highs in recent weeks, mobility data from TomTom and Google has shown an increase in people driving. Gas Prices Hit 14th Straight Record-High U.S. gas prices hit a new record high for the 14th straight day today. AAA shows the national average rose to $4.596 overnight. That’s up more than 11 cents from a week ago and more than 47 cents compared to one month ago. At this same time last year, a gallon of regular gas cost just $3.039. Diesel prices have cooled after hitting a record-high last week. A gallon of diesel now costs $5.554, down from $5.577 on May 18. VMware Surges On Rumored Broadcom Acquisition VMware (VMW)) shares are surging 20.7% ahead of the open amid reports chipmaker Broadcom (AVGO) is in talks to acquire the company. Reuters reported negotiations are ongoing and a deal is not imminent. No details of a potential deal are known but Wells Fargo analysts said, “We believe an acquisition of VMware would be considered as making strategic sense; consistent with Broadcom’s focus on building out a deepening enterprise infrastructure software strategy.” Broadcom shares are slipping 4.9% in premarket trade. GameStop Launches Crypto, NFT Wallet GameStop (GME) shares are up 2.8% ahead of the open after launching its digital asset wallet for crypto and NFTs. The company said the wallet will “allow gamers and others to store, send, receive, and use cryptocurrencies and non-fungible tokens across decentralized apps without having to leave their web browsers.” GameStop also said it “is a self-custodial Ethereum wallet.” A wallet extension can be downloaded on Google Chrome which will later enable transactions on GameStop’s upcoming NFT marketplace. The company said that is expected to launch in fiscal Q2. World Economic Forum Underway In Davos More than 2,000 world leaders, economic experts, and business leaders are gathered in Davos, Switzerland for the 2022 World Economic Forum. The meeting kicked off Sunday and this is the first in-person summit since January 2020. The theme of this year’s meeting is “History at a Turning Point”. Russia was excluded from the annual meeting due to the war in Ukraine while Ukrainian President Volodymyr Zelenskyy will address the summit via video. U.S. climate envoy John Kerry is attending the summit but President Biden is not. The meeting is expected to focus on war, with panels on climate change, rising energy prices, global supply chain issues, poverty, and the metaverse.
Continue Reading -->Coffee With Greta: The Bear Just Missed…
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: +272 (+0.9%) SPX Futures: +43 (+1.1%) NASDAQ Futures: +173 (+1.5%) Good morning friends! Futures are higher as the market looks poised for a Friday rally after two days of selling. Let’s get right to it! S&P 500 Inching Closer to Bear Market The S&P 500 looks like it will avoid opening in bear market territory as the index teeters on the edge of that cliff. The official closing level for a bear market is 3,837.25, which would be down 20% from the index’s most recent record in January. If the S&P slips into that territory it would be its first bear market since the pandemic plunge in March 2020. The Nasdaq is already deep in a bear market, down 29% from its November record as of Thursday’s close. The Dow has dropped more than 15% from its high. Even with today’s bounce, the Dow is on track for its first 8-week losing streak since 1932. Both the S&P and the Nasdaq are on track for their seventh straight weekly loss. Investors Flee To Bonds The 10-year and 30-year Treasury yields are both flat, after tumbling on Thursday as investors flee to safety amid turmoil on Wall Street. Yields fall as more investors buy Treasury notes and bonds. Analysts say this week’s activity in the Treasury market shows investors are becoming increasingly concerned about the short-term future of the economy as the Fed tackles inflation. Foot Locker Rises on Earnings Beat Foot Locker (FL) shares are up 4.2% ahead of the open after beating Q1 profit expectations. The shoe retailer reported adjusted earnings of $1.60 per share on $2.18 billion in revenue. Analysts were expecting adjusted EPS of $1.54 on $2.2 billion in revenue. Comparable-store sales fell 1.9% year over year and the company’s gross margin fell by 1% as supply-chain costs and markdowns rose. Foot Locker forecast full-year earnings at the top range of its guidance. The company expects EPS to be between $4.25 and $4.60 in 2022. Discount Retailer Ross Plunges On Earnings Ross Stores (ROST) shares are tumbling 23.3% in premarket trade after missing Q1 expectations. The discount retailer reported earnings of $0.97 per share on $4.33 billion in revenue. That missed analysts’ expectations for EPS of $0.99 on $4.53 billion in revenue. It was also a sharp decline from EPS of $1.34 on $4.52 billion a year ago. Comparable-store sales dropped 7% compared to Q1 2021. Ross forecast same-store sales will fall 4% to 6% annually in Q2 with EPS between $0.99 and $1.07. Deere Slips Despite Earnings Beat Deere & Company (DE) shares are down 5.7% ahead of the open despite beating Q1 expectations. The company reported earnings of $6.81 per share on $13.4 billion in revenue. That was better than analysts’ expectations for EPS of $6.69 on $13.2 billion in revenue. It was also an increase from Q1 2021 and Deere hiked its full-year earnings guidance. The company now expects $7.2 billion in net income this year, up from $6.9 billion previously and higher than analysts’ estimates for $7 billion. Palo Alto Networks Jumps On Outlook Palo Alto Networks (PANW) shares are up 11.8% in premarket trade after beating fiscal Q3 expectations and hiking its full-year guidance. The cybersecurity company reported adjusted earnings of $1.79 per share on $1.39 billion in revenue. That topped expectations for adjusted EPS of $1.68 on $1.36 billion in revenue. Revenue jumped 29% year-over-year. Palo Alto’s CEO said, “We saw strong top-line growth in Q3, which is a testament to our teams’ consistent execution in capitalizing on the strong cybersecurity demand trends.” The company hiked its full-year outlook, forecasting adjusted EPS between $7.43 and $7.46 per share and revenue between $5.481 billion and $5.501 billion. That beat analysts’ estimates for EPS of $7.29 on $5.46 billion in revenue. Oil Prices Hold Steady Oil prices are slightly higher today as the market weighs several factors. West Texas Intermediate crude futures are up 0.3% to $112.50 bbl while Brent crude futures are 0.3% higher at $112.40 bbl. Concerns about slowing economic growth in the U.S. are offsetting expectations of a demand rebound in China. The EU is also still working to approve a sanctions package which includes a ban of Russian oil imports. Both WTI and Brent are on track for their fourth straight weekly gain. U.S. Gas Prices Hit New Record Average U.S. gas prices jumped to another record-high for the 11th day in a row today. AAA shows the national average for a gallon of regular rose to $4.593 overnight. Diesel slipped to $5.57/gal after touching $5.577 earlier this week. Gas prices have been surging due to reduced refinery capacity in the U.S. on top of higher oil prices from Russia’s war in Ukraine. In Case You Missed It Existing home sales tumbled 2.4% in April as mortgage rates rose. The National Association of Realtors reported sales dropped to a seasonally adjusted annual rate of 5.61 million units vs 5.64 million expected. The median sales price jumped 14.8% year-over-year to a record $391,200. There were 1.03 million homes for sale at the end of April, representing a 2.2-month supply at the current sales pace. The Conference Board’s leading economic index fell 0.3% in April. That drop was unexpected as economists had forecast a flat reading. The decline was largely due to a decline in home building permits and consumer confidence. The Conference Board expects the U.S. economy will expand just 2.3% this year vs 5.6% in 2021.
Continue Reading -->Coffee With Greta: Retail Is a Total Mess, Thanks to Inflation
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -339 (-1.1%) SPX Futures: -41 (-1%) NASDAQ Futures: -124 (-1%) Good morning friends! Futures are falling with the S&P 500 teetering on the brink of a bear market following more disappointing retail earnings. Let’s get right to it! Kohl’s Slashes Outlook Kohl’s (KSS) shares are down 7.1% ahead of the open after missing fiscal Q1 profit expectations and slashing its full-year outlook. The retailer reported earnings of $0.11 per share on $3.72 billion in revenue. Analysts were expecting EPS of $0.70 on $3.68 billion in revenue. Comparable sales tumbled 5.2% year over year vs analysts’ expectations for a 0.5% increase. Kohl’s CEO blamed the profit miss on inflation. “Sales considerably weakened in April as we encountered macro headwinds related to lapping last year’s stimulus and an inflationary consumer environment,” she said. The company now expects full-year adjusted EPS between $6.45 to $6.85 vs the previous forecast for $7.00 to $7.50. Kohl’s also said final and fully-financed bids from potential buyers are expected in the coming weeks as it faces increased pressure to sell. Cisco Crashes On Revenue Miss, Weak Outlook Cisco Technologies (CSCO) shares are tumbling 11.3% in premarket trade after missing fiscal Q3 revenue expectations and calling for an unexpected sales decline in the current quarter. The networking company reported adjusted earnings of $0.87 per share vs analysts’ expectations for $0.86. But revenue of $12.84 billion missed analysts’ estimates for $13.34 billion. Cisco’s CEO said the Ukraine war reduced revenue by $200 million, added $5 million to the cost of sales last quarter, and added $62 million in operating expenses. The company forecast earnings between $0.76 and $0.84 per share in fiscal Q4. Cisco expects revenue to fall 1% to 5.5% annually this quarter. Analysts were estimating fiscal Q4 earnings at $0.92 per share on $13.87 billion in revenue, which would be up 6% year over year. Bath & Body Works Drops After Cutting Outlook Bath & Body Works (BBWI) shares are dropping 7.6% ahead of the open despite beating Q1 expectations. The specialty retailer reporting earnings of $0.64 per share on $1.45 billion in revenue. That was better than analysts’ expectations for EPS of $0.53 on $1.44 billion in revenue. Bath & Body Works forecast full-year earnings between $3.80 and $4.15 per share vs previous guidance of between $4.30 and $4.70 per share. The company said that adjusted outlook reflects its “decision to accelerate investments in information technology and its customer loyalty program, as well as projected increases in inflationary pressures.” Under Armour CEO Steps Down Under Armour (UAA) shares are sliding 5.7% in premarket trade after announcing its president and CEO will step down. Patrik Frisk will leave the position effective June 1. Current COO Colin Browne will take over as operating CEO while the company searches for a permanent replacement. Frisk will also step down from the Board of Directors but will remain with Under Armour as an advisor through September 1. Weekly Jobless Claims Hit 4-Month High Weekly jobless claims rose to a 4-month high. The Labor Department reported 218,000 Americans filed initial claims for unemployment benefits last week, up 21,000 from the previous week’s revised level. That was sharply higher than economists’ expectations for 200,000. Continuing claims fell by 2,000 to 1.32 million in the week ending May 7. Philly Fed Manufacturing Index Tumbles Manufacturing activity slowed sharply in the Philadelphia Fed region. The Philly Fed’s Gauge of Regional Manufacturing plunged to 2.6 in May vs 15 expected. That’s the lowest level of activity in two years but any reading above 0 still indicates expansion in the sector. The new orders index rose 4.3 points to 22.1 while the shipments index rose 16.2 points to 35.3, the highest since October 2021. But the employment index tumbled 16 points to 25.5, dragging down the overall reading. Respondents to the survey expect inflation to still be at 6.5% a year from now, up from the previous outlook for 5% in February. The 6-month business outlook also slumped by 5.7 points to 2.5 in May. Oil Prices Fall On Economic Growth Fears Oil prices are sliding on fears of an economic slowdown in the U.S. West Texas Intermediate crude futures are down 2.8% to $106.50 bbl while Brent crude futures are falling 1.7% to $107 bbl. Energy traders are growing concerned about the impact of high fuel prices on economic growth. But the EU’s still expected ban of Russian oil imports is supporting prices from falling further. U.S. Gas Prices Hit 10th Straight Record-High Average gas prices in the U.S. jumped more than 2 cents overnight . AAA shows the national average for a gallon of regular rose to $4.589 today, a new record for the 10th straight day. Diesel held steady at $5.577/gal. Existing Home Sales Expected to Fall The National Association of Realtors reports existing home sales for April at 10:00 a.m. ET. That report is expected to show sales fell last month to a seasonally adjusted annual rate of 5.64 million units. The housing market has suffered from high demand and low inventory over the past two years. But buyer demand has fallen in recent months as mortgage rates jump. In Case You Missed It U.S. oil inventories declined unexpectedly last week. The Energy Information Administration reported crude inventories dropped by 3.4 million barrels in the week ending May 13 vs expectations for an increase of 2.1 million barrels. The U.S. gasoline stockpile fell by 4.8 million barrels vs expectations for a 100,000 barrel decline. Retail stocks got rocked by weak earnings on Wednesday. Target (TGT) was the biggest loser in the sector, plummeting 24.8% after missing Q1 profit expectations. That was the largest one-day plunge for the stock since Black Monday in 1987. Walmart (WMT) shares tumbled 6.9% while Costco (COST) dropped 12.5%. American CEOs are expecting the Fed’s inflation battle to cause
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Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -184 (-0.6%) SPX Futures: -32 (-0.8%) NASDAQ Futures: -144 (-1.1%) Good morning friends! Futures are lower following disappointing retail earnings. Let’s get right to it! Target Craters On Big Earnings Miss Target (TGT) shares are plunging 24.2% ahead of the open after sharply missing Q1 expectations. The retailer reported adjusted earnings of $2.19 per share on $25.17 billion in revenue. EPS came in below the $3.07 consensus but the revenue number beat estimates of $24.49 billion. Comparable sales rose 3.3% year over year, better than expectations for a 0.8% gain. Profits plummeted 41% compared to a year ago. Target’s CEO Brian Cornell blamed the profit miss on “unusually high costs”. Those challenges included inventory that arrived too early or too late, employee compensation, more employees at distribution centers, and changing merchandise sales. Target was also hit by higher freight costs as gas prices jumped, those issues are expected to be worse in Q2. The company reiterated its full-year forecast for revenue growth in the mid single-digits but did not provide earnings guidance. Lowe’s Dips On Revenue Miss Lowe’s (LOW) shares are down 4% in premarket trade after missing Q1 sales expectations. The home improvement retailer reported earnings of $3.51 on $23.66 billion in revenue. That was better than analysts’ expectations for EPS of $3.22 but missed estimates for $23.76 billion in revenue. Lowe’s CEO said sales in its outdoor seasonal categories “were impacted by unseasonably cold temperatures in April.” He said the company has already seen improvement in May. Same-store sales were down 4% year over year, worse than expectations for a 2.5% drop. Lowe’s reiterated its full-year outlook for revenue to range between $97 billion and $99 billion. Housing Starts, Building Permits Slump U.S. homebuilding slowed unexpectedly in April. The Census Bureau reported housing starts fell 0.2% to a seasonally adjusted annualized rate of 1.72 million units. That missed economists’ expectations for starts to rise to a SAAR of 1.75 million units. Building permits also tumbled but were in line with expectations. The number of new permits issued last month dropped 3.2% to a SAAR of 1.82 million units. The data is indicative of a new home market that is struggling amid surging material costs and falling demand due to rising mortgage rates. Weekly Mortgage Demand Tumbles Mortgage demand fell last week even as rates cooled a bit. The Mortgage Bankers Association says purchase applications fell 12% weekly and dropped 15% year over year. That was the first weekly drop since the third week in April. Refinance applications fell 10% weekly and were down 76% compared to a year ago. The average 30-year contract rate actually decreased to 5.49% from 5.53%, but those rates are still sharply higher than even a few months ago. Adjustable-rate mortgages made up 10.5% of all applications, up from about 3% at the start of the year. Oil Prices Rise On China Demand Optimism Oil prices are rising on optimism that easing Covid restrictions in China will boost demand. West Texas Intermediate crude futures are up 2.2% to $115 bbl while Brent crude futures are up 1.6% to nearly $114 bbl. Shanghai, China has had three consecutive days of no new Covid cases outside quarantine zones. Authorities allowed 864 of the city’s financial institutions to resume work Wednesday. The American Petroleum Institute reported Tuesday that U.S. crude inventories fell by 2.4 million barrels last week. Gasoline inventories declined by 5.1 million barrels. The Energy Information Administration reports official inventory data today. The EIA report is expected to show a 2.1 million barrel increase in crude inventories and a 100,000 barrel decline in gas stockpiles. U.S. Gas Prices Hit New Record Average gas prices in the U.S. jumped more than 4 cents overnight. AAA shows the national average for a gallon of regular rose to $4.567 today, a new record for the ninth straight day. Diesel jumped to a fresh record $5.577/gal. Analysts say U.S. households are now spending $5,000 a year on gas. That’s up sharply from $2,800 a year ago. In March, the annual rate of spending on gas was at just $3,800. Powell: Fed Won’t Hesitate to Move Rates Past Neutral Fed Chair Jerome Powell told the Wall Street Journal Tuesday that the bank is committed to doing whatever it takes to tackle inflation. Powell said, “If that involves moving past broadly understood levels of neutral we won’t hesitate to do that”. He said the Fed’s goal is to reach “a place where we can say financial conditions are in an appropriate place, we see inflation coming down. We’ll go to that point. There won’t be any hesitation about that.” The Fed Chair also warned those efforts do have the potential to cause a recession but said “there are a number of plausible paths to have a soft as I said softish landing. Our job isn’t to handicap the odds, it’s to try to achieve that.” CME Group’s FedWatch Tool shows 87% of traders expect a 0.5% rate hike at the June meeting after Powell previously said a 0.75% was not on the table. 13% of traders are still betting on a 75-basis point hike. Elon Musk Wants SEC Investigation of Twitter’s Fake User Claims Elon Musk escalated his dispute with Twitter (TWTR) over the number of fake users on the platform Tuesday. Musk responded to a tweet that said, “The SEC should investigate” whether Twitter’s estimates about fake users are true. In response, Musk tweeted “Hello @SECGov, anyone home?” Twitter shares have been tumbling as investors sell the stock in fear Musk will abandon his $44 billion deal to take the company private. TWTR is down 1.1% ahead of the open. The stock has given up all of its gains since Musk originally unveiled his stake in the company on April 4. In Case You Missed It The National Association of
Continue Reading -->Coffee With Greta: The People vs. Inflation
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: +371 (+1.1%) SPX Futures: +56 (+1.4%) NASDAQ Futures:+213 (+1.7%) Good morning friends! Futures are rallying after some strong economic data. Let’s get right to it! April Retail Sales Jump The Commerce Department reported U.S. retail sales rose 0.9% in April to $677.7 billion as consumers remain resilient in the face of soaring prices. Although that was slightly lower than economists’ expectations for a 1% gain, March was revised higher to a 1.4% increase from the original 0.7%. Retail sales were up 8.2% compared to April 2021. Gasoline sales surged 36.9% year-over-year while restaurant sales jumped 19.8% annually. Core retail sales, which excludes gas stations and auto dealers, rose 1% last month. Adjusted for inflation on a monthly basis, retail sales were still up 0.6%. Walmart Tumbles On Earnings Miss Walmart (WMT) shares are falling 5.6% ahead of the open after missing Q1 earnings expectations. The retailer reported adjusted earnings of $1.30 per share on $141.57 billion in revenue. That was weaker than analysts’ expectations for adjusted EPS of $1.48 but beat estimates for $138.94 billion in revenue. Walmart’s CFO blamed the miss on high fuel costs, labor costs, and high inventory levels. The CEO said, “We’re adjusting and will balance the needs of our customers for value with the need to deliver profit growth for our future”. The company raised its sales outlook, forecasting net revenue growth of about 4% this year vs the prior 3% outlook. But Walmart lowered profit expectations, now expecting full-year EPS to decline about 1% year-over-year. Home Depot Rallies On Earnings Beat Home Depot (HD) shares are up 3.6% in premarket trade after reporting a record first quarter. The home improvement retailer reported earnings of $4.09 per share on $38.91 billion in revenue. That crushed analysts’ expectations for EPS of $3.68 on $36.72 billion in revenue. Revenue jumped 3.8% and set a new record for Q1. Same-store sales increased 2.2%. Home Depot hiked its full-year outlook, now expecting revenue growth of about 3% and EPS growth in the mid-single digits. Berkshire Invests in Citigroup, Paramount Citigroup (C) shares are 5% higher ahead of the open while Paramount (PARA) is jumping 10% after Berkshire Hathaway (BRK.A) unveiled new investments in both companies. In an SEC filing Monday evening, Berkshire said it purchased more than 55 million Citigroup shares and had a $2.95 billion stake in the bank as of the end of March. Warren Buffett’s company also bought 68.9 million shares of Paramount, bringing that stake to $2.6 billion at the end of March. Oil Prices Rise, U.S. Gas Prices At Fresh Record Oil prices jumped to a 7-week high today as the EU continues efforts to ban Russian oil imports. West Texas Intermediate crude futures are up 0.3% to $114.50 bbl while Brent crude futures are 0.4% higher at $114.75 bbl. Brent rose to a high of $115.69 earlier today, the highest since March 28. The market is also expecting higher demand as China lifts Covid restrictions. U.S. gas prices hit a fresh record-high today as well. AAA shows the national average for a gallon of regular jumped 4 cents overnight to $4.523. Diesel also rose to a new record $5.573/gal. Musk Still Focused On Fake Twitter Accounts Twitter (TWTR) shares are falling 2% ahead of the open after Elon Musk said he will not move ahead on his take over deal without more clarity on fake users. In a tweet this morning, Musk said “My offer was based on Twitter’s SEC filings being accurate. Yesterday, Twitter’s CEO publicly refused to show proof of <5%. This deal cannot move forward until he does.” Twitter then filed a proxy statement with the SEC, saying it is committed to the deal at the pre-agreed price. Musk hinted Monday he could seek to renegotiate that $44 billion price. Bloomberg reported that Musk said a deal at a lower price wasn’t “out of the question” during an event in Miami Monday. Twitter shares tumbled 8.2% in Monday’s session and have erased all gains made since Musk disclosed his investment in the company in early April. The Tesla CEO estimates fake users make up at least 20% of all Twitter users while the company says it is less than 5%. United Airlines Rallies On Updated Outlook United Airlines (UAL) shares are up 4.2% in premarket trade after the company issued an updated Q2 outlook after-hours on Monday. In an SEC filing, the airline said, “the demand environment has continued to improve, resulting in a higher unit revenue outlook for the second quarter 2022.” United now expects total revenue per available seat mile (TRASM) to be 23% to 25% higher compared to Q2 2019, up from previous guidance of 17%. The company also expects capacity to be 14% higher versus previous guidance of 13%. Homebuilder Sentiment Expected to Fall The National Association of Homebuilders releases its April sentiment index at 10:00 a.m. ET. Economists expect the index to fall 2 points to 75. Homebuilders have enjoyed strong demand for new homes amid a severe shortage of existing homes in the market. But they have also struggled with high costs, supply chain shortages, and an ongoing labor shortage. In Case You Missed It The White House is in a spat with Jeff Bezos over inflation. In a statement Monday, the Biden Administration said “it doesn’t require a huge leap to figure out why” Bezos is opposed to their plans to raise taxes on the wealthy and corporations. Bezos responded in a tweet accusing the White House of trying to “muddy the topic”. The Amazon (AMZN) founder accused the administration late last week of “misdirection” for trying to link inflation to corporate taxes.
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