Market Update
Big Lots Swings to Quarterly Loss, Inventories Rise 23%
Scott Peters
30 Aug, 2022
New York City
Big Lots Inc increased 5.2% to $22.69 after the discount retailer posted a smaller-than-expected quarterly loss.
The closeout merchandiser is still struggling with inventory mismatch, persistent supply chain problems, and weaker consumer spending.
Net sales in the second quarter declined 7.6% to $1.35 billion driven by comparable sales decline of 9.2%.
The retailer swung to a loss of $84.2 million or $2.90 a share compared to a profit of $37.7 million or $1.09 a share a year ago.
The retailer plans to increase its promotion activities to clear unwanted inventories and anticipates gross margin to return in the fourth quarter matching the previous year.
Inventories
Inventories at the end of the second quarter rose largely on the higher prices and early ordering ahead to avoid supply chain disruptions.
Inventories increased 22.8% to $1,159.0 million compared to $943.8 million for the same period last year.
Credit Facility Refinancing
The company is in the process of relacing its existing $600 million 5-year unsecured credit facility with a new $900 million facility with an option to increase $300 million in the third quarter.
The new facility is arranged with PNC Bank and its affiliates.
Dividend and Stock Buybacks
A week ago, the company declared a quarterly cash dividend of 30 cents a common share totaling approximately $8.7 million payable on September 23, 2022 to shareholders of record as of September 9, 2022.
The company did not execute any share repurchases during the quarter and has $159 million remaining under its $250 million authorization.
Guidance and Outlook
For the third quarter, the company expects comparable sales from a year ago to be down in the "low double-digit range."
Net new stores will add about 140 basis points of growth compared to a year ago.
The company expects continued significant promotional activity in the fiscal year third quarter resulting in a gross margin rate into the mid-30s, and that SG&A expenses "will grow low single-digits" from a year ago.
Best Buy Domestic Comparable Second Quarter Sales Fall 12.7%
Scott Peters
30 Aug, 2022
New York City
Best Buy rose 3.1% to $75.90 after the electronic retailer posted better-than-anticipated quarterly results.
The retailer said total revenues declined to $10.3 billion from $11.9 billion a year ago.
Sales continue to fall as consumers shift priorities and limit purchases beyond basic products,
The retailer has stepped up its online promotion activities to lure customers back.
Domestic revenue fell 13.1% from a year ago to $9.57 billion primarily driven by a comparable sales decline of 12.7%.
Comparable sales declined across almost all categories, with the largest drivers on a weighted basis being computing and home theater, the company said in the earnings release statement.
Domestic comparable online revenue declined 14.7% to $2.97 billion and as a percentage of total domestic revenue, online revenue edged down to 31.0% compared to 31.7% last year.
Second quarter net income dropped to $306 million or $1.35 a share from $734 million or $2.90 a share a year ago.
Guidance
The retailer guided full-year comparable sales to decline "slightly more than the 12.1% decline reported in the second quarter."
Stock Repurchase and Dividend
In the quarter, the company returned a total of $208 million to shareholders through share repurchases of $10 million and dividends of $198 million.
In the first-half the company has returned a total of $862 million to shareholders through share repurchases of $465 million and dividends of $397 million.
The company paused share repurchases in the second quarter and announced its regular quarterly cash dividend of $0.88 a common share payable on October 11, 2022, to shareholders of record as of September 20, 2022.
Movers: Baidu, Best Buy, Big Lots, First Solar, Lucid Group, Netflix, Peloton
Barry Adams
30 Aug, 2022
New York City
Stocks opened higher after two days of selloff and quickly dropped below the flat-line on the rising worries of economy tipping into a recession.
The S&P 500 index fell 0.5% to 4,008.13 and the Nasdaq Composite index declined 0.6% to 11,955.03.
Corporate stock buyback activity is likely to pick up in the remainder of the year ahead of the imposition of the 1% tax next year as approved in the Inflation Reduction Act.
Weekly stock buybacks surged to the highest level in the last week since January, Savita Subramanian of Bank of America wrote in a research note.
The bond yields edged lower after rising for two days following the tough talks from central bankers in the U.S. and Europe.
The yield on 10-year treasury notes inched lower to 3.08% and 2-year notes edged down to 3.46%.
Energy prices edged down on the worries that the demand for crude oil may decline and the current tight supply and demand conditions are likely to change if the global economic slowdown persists.
Futures of crude oil declined $4.20 to $92.92 a barrel and natural gas decreased 42 cents to $8.52 a British thermal unit.
Stocks lacked direction in trading today and traders reacted to the latest corporate news.
Energy complex and resource stocks led the decliners after crude oil and natural gas prices eased.
CF Industries, Freeport-McMoRan, Mosaic, Marathon Oil, Diamondback led the decliners with a loss between 5% and 7%.
PPG Industries, Best Buy, Masco, Sherwin Williams and Corning Inc led the gainers of the day.
Baidu Inc declined 6.4% to $137.81 and the China-based search engine operator reported better-than-expected results and said ad demand is recovering.
Bed Bath & Beyond declined 2.5% to $13.01 after surging 12% earlier in the day and following a 25% jump in the previous session.
The troubled retailer is scheduled to release its company strategy including its options to arrange more financing.
Best Buy rose 3.1% to $75.90 after the electronic retailer posted better-than-anticipated quarterly results.
The retailer said total revenues declined to $10.3 billion from $11.9 billion a year ago.
Second quarter net income dropped to $306 million or $1.35 a share from $734 million or $2.90 a share a year ago.
The retailer guided full-year comparable sales to decline "slightly more than the 12.1% decline reported in the second quarter."
Big Lots Inc increased 5.2% to $22.69 after the discount retailer posted a smaller-than-expected quarterly loss.
Net sales in the second quarter declined 7.6% to $1.35 billion driven by comparable sales decline of 9.2%.
The retailer swung to a loss of $84.2 million or $2.90 a share compared to a profit of $37.7 million or $1.09 a share a year ago.
The retailer plans to increase its promotion activities to clear unwanted inventories and anticipates gross margin to return in the fourth quarter matching the previous year.
First Solar Inc increased 1.2% to $123.20 after the solar equipment manufacturer said it reversed its earlier decision and now plans to expand its U.S. manufacturing including a new plant in the southeast after the passage of the Inflation Reduction Act.
Lucid Group fell 6.8% to $15.07 after the maker of electric vehicles filed a shelf offering to raise as much as $8 billion over the next three years. The company said it has no plans to raise capital soon.
Netflix Inc declined 1.6% to $221.69 after the company denied a recent report published by Bloomberg news that it has finalized the price for its its ad-supported streaming services.
The company told to New York Post that the service plan is still in the early stage of development and there is no decision made on the price of the offering.
Peloton Interactive declined 4% to $10.04 after the maker of fitness equipment said it needs more time to finalize its annual report as the company struggles with its restructuring plan.
Twitter Inc declined 1.05% to $39.59 after Elon Musk filed a second notice with the SEC for his reasons to terminate the $44 billion deal to acquire the company in early July.
Total July Job Openings Stable
Brian Turner
30 Aug, 2022
New York City
Job openings in the U.S. rose after falling for three months in a row., the Bureau of Labor Statistics said Tuesday.
The number of job openings rose 199,000 to 11.2 million in July driven by the new postings in logistics, entertainment and recreation and governments at all levels.
In July, the number of hires was little changed at 6.4 million and the hire rate was unchanged at 4.2% and total separations held at 5.9 million including 4.2 million quits and 1.4 million layoffs and discharges.
Hires were little changed in all industries.
Stocks Lack Direction, Bond Yields and Energy Prices Ease
Barry Adams
30 Aug, 2022
New York City
Stocks opened higher after two days of selloff but struggled to stay in the positive zone after one hour of trading.
The S&P 500 index fell 0.5% to 4,008.13 and the Nasdaq Composite index declined 0.6% to 11,955.03.
Corporate stock buyback activity is likely to pick up in the remainder of the year ahead of the imposition of the 1% tax next year as approved in the Inflation Reduction Act.
Weekly stock buybacks surged to the highest level in the last week since January, Savita Subramanian of Bank of America wrote in a research note.
The bond yields edged lower after rising for two days following the tough talks from central bankers in the U.S. and Europe.
The yield on 10-year treasury notes inched lower to 3.08% and 2-year notes edged down to 3.46%.
Energy prices edged down on the worries that the demand for crude oil may decline and the current tight supply and demand conditions are likely to change if the global economic slowdown persists.
Futures of crude oil declined $4.20 to $92.92 a barrel and natural gas decreased 42 cents to $8.52 a British thermal unit.
Job openings in the U.S. rose after falling for three months in a row., the Bureau of Labor Statistics said Tuesday.
The number of job openings rose 199,000 to 11.2 million in July driven by the new postings in logistics, entertainment and recreation and governments at all levels.
Stocks lacked direction in trading today and traders reacted to the latest corporate news.
Baidu Inc declined 6.4% to $137.81 and the China-based search engine operator reported better-than-expected results and said ad demand is recovering.
Bed Bath & Beyond declined 2.5% to $13.01 after surging 12% earlier in the day and following a 25% jump in the previous session.
The troubled retailer is scheduled to release its company strategy including its options to arrange more financing.
Best Buy rose 3.1% to $75.90 after the electronic retailer posted better-than-anticipated quarterly results.
The retailer said total revenues declined to $10.3 billion from $11.9 billion a year ago.
Second quarter net income dropped to $306 million or $1.35 a share from $734 million or $2.90 a share a year ago.
The retailer guided full-year comparable sales to decline "slightly more than the 12.1% decline reported in the second quarter."
Big Lots Inc increased 5.2% to $22.69 after the discount retailer posted a smaller-than-expected quarterly loss.
Net sales in the second quarter declined 7.6% to $1.35 billion driven by comparable sales decline of 9.2%.
The retailer swung to a loss of $84.2 million or $2.90 a share compared to a profit of $37.7 million or $1.09 a share a year ago.
The retailer plans to increase its promotion activities to clear unwanted inventories and anticipates gross margin to return in the fourth quarter matching the previous year.
First Solar Inc increased 1.2% to $123.20 after the solar equipment manufacturer said it reversed its earlier decision and now plans to expand its U.S. manufacturing including a new plant in the southeast after the passage of the Inflation Reduction Act.
Lucid Group fell 6.8% to $15.07 after the maker of electric vehicles filed a shelf offering to raise as much as $8 billion over the next three years. The company said it has no plans to raise capital soon.
Peloton Interactive declined 4% to $10.04 after the maker of fitness equipment said it needs more time to finalize its annual report as the company struggles with its restructuring plan.
Twitter Inc declined 1.05% to $39.59 after Elon Musk filed a second notice with the SEC for his reasons to terminate the $44 billion deal to acquire the company in early July.
Treasury Yields Rise and Stocks Extend Losses
Barry Adams
29 Aug, 2022
New York City
Stocks extended losses after Friday's selloff and bond yields rose as central bankers mount a concerted campaign to lift rates.
Benchmark indexes eased as investors digested Friday's comments from the Federal Reserve chief and prepared for higher rates at the remaining two meetings of the policymakers in the year.
Bond yields advanced in the U.S. and Europe and markets are anticipating more comments from central bankers this week ahead of the U.S. payroll report on Friday.
Across the Atlantic, policymakers in Europe also accelerated the campaign for higher rates ahead of the next meeting in less than two weeks.
Eight-week long U.S. market rally from the lows of mid-June was powered by investors hoping economic soft landing and declining interest rates next year.
However, those hopes were dashed after the Fed chief forcefully reiterated that the inflation is too high and the central bank will take forceful measures as long as necessary to cool down the rapid price increases.
The strong message sent a clear signal that the Fed may dip the economy in recession if necessary to cool down the high inflation to its preferred target rate of 2%.
The S&P 500 index declined 0.7% to 4,030.51 and the Nasdaq Composite index dropped 1.0% to 12,017.67.
Tech stocks led the decliners in a broad selloff for the second day but the energy complex stock advanced after crude oil prices continued to advance on tight demand supply conditions.
The natural gas prices in Europe are still running nine times, yes nine-fold, higher to the U.S. prices on the persistent worries of Russian supply in the coming months.
Futures of crude oil rose $3.88 to $96.94 a barrel and natural gas advanced 2 cents to $9.35 a British thermal unit.
The yield on 10-year Treasury notes inched up to 3.11% and two-year notes rose to a 15-year record high of 3.41%
In trading on Wall Street, stocks lacked direction in morning trading but sell overwhelmed buy orders.
Microsoft, Alphabet, Amazon.com, and Apple declined between 0.5% and 1.3%.
Exxon Mobil, Marathon Oil, Hess Corp, and Valero Energy rose between 2% and 4%.
Moderna Inc increased 1.2% to $138.43 after Swiss regulators approved the company's latest vaccine that targets the omicron variant.
Walmart Inc rose 1.4% to $133.49 and the retailer offered to acquire the remaining stake in the South Africa-based Massmart for $378 million.
Walmart's offer for the 47% stake of Massmart is 53% higher than Friday's close price.
Etsy Inc increased 0.8% to $105.17 and the online platform operator tightened its seller's account and bank account information.
Pinduoduo Inc soared 16.6% to $67.14 after the China-based online commerce platform operator reported better-than-expected quarterly results.
European Markets Brace for Rate Hikes
European markets extended Friday's losses and the worries of faster and larger rate hikes in the euro zone.
Bond yields in the eurozone rose after leading European policymakers said immediate rate hikes are necessary to cool inflation even at the risk of tipping the economy into a recession.
Isabel Schnabel, a German economist and a member of the European Central Bank, stressed in a comment directed to other members to signal their determination to bring inflation back to target quickly.
Olli Rehn, another member of the governing council, said that the central bank should act now because "high inflation is spreading in the economy" and "time to act is now and manage the inflation expectations and keep it anchored to target rate."
The ECB governing council member Francois Villeroy and policymaker Martins Kazaks also hinted at aggressive policy tightening at the next rate decision meeting.
The European Central Bank is scheduled to meet on September 8 and economists are anticipating a rate increase of either 50 or 75 basis points.
The yield on the German government 10-year bunds rose to 1.506% and the yield on 2-year U.K. government bonds edged lower to 2.797%.
The yield on 10-year Italian government bonds yield rose to 3.8% and on French bonds of similar maturities edged up to 2.12%.
The DAX index decreased 0.6% to 12,892.22, the CAC-40 index dropped 0.8% to 6,222.28, and the FTSE 100 index eased 0.7% to 7,427.31.
The euro held firm in parity with the U.S. dollar and the British pound edged lower to $1.17, only 4 cents shy of its record low in nearly four decades, as the inflation continues to accelerate in the island nation.
The British pound is expected to decline more on the rising energy subsidies to households and dent bigger hole in the government finances.
In stock trading, benchmark indexes opened lower and continued to slide more after the weak trading in Jew York.
Popular indexes trimmed losses near the end of the session but closed down for the day.
Tech stocks led the decliners with STMicroelectronics and Infineon Technologies dropped between 3% and 4%.
Valneva SE declined 0.4% to 9.22 euros and the French drug maker reported positive late stage trial results for its Covid-19 vaccine with booster effects.
The Swiss Market index fell 1.1%or 121.72 points 10,942.16 and financials were among the leading decliners.
Credit Suisse, UBS, Givaudan, Alcon, and Richemont fell between 2% and 4%.
European Bond Yields Rise and Stocks Fall as Rate Hike Looms
Bridgette Randall
29 Aug, 2022
Frankfurt
European markets extended Friday's losses and the worries of faster and larger rate hikes in the euro zone.
Bond yields in the eurozone rose after leading European policymakers said immediate rate hikes are necessary to cool inflation even at the risk of tipping the economy into a recession.
Isabel Schnabel, a German economist and a member of the European Central Bank, stressed in a comment directed to other members to signal their determination to bring inflation back to target quickly.
Olli Rehn, another member of the governing council, said that the central bank should act now because "high inflation is spreading in the economy" and "time to act is now and manage the inflation expectations and keep it anchored to target rate."
The ECB governing council member Francois Villeroy and policymaker Martins Kazaks also hinted at aggressive policy tightening at the next rate decision meeting.
The European Central Bank is scheduled to meet on September 8 and economists are anticipating a rate increase of either 50 or 75 basis points.
The yield on the German government 10-year bunds rose to 1.506% and the yield on 2-year U.K. government bonds edged lower to 2.797%.
The yield on 10-year Italian government bonds yield rose to 3.8% and on French bonds of similar maturities edged up to 2.12%.
The DAX index decreased 0.6% to 12,892.22, the CAC-40 index dropped 0.8% to 6,222.28, and the FTSE 100 index eased 0.7% to 7,427.31.
The euro held firm in parity with the U.S. dollar and the British pound edged lower to $1.17, only 4 cents shy of its record low in nearly four decades, as the inflation continues to accelerate in the island nation.
The British pound is expected to decline more on the rising energy subsidies to households and dent bigger hole in the government finances.
In stock trading, benchmark indexes opened lower and continued to slide more after the weak trading in Jew York.
Popular indexes trimmed losses near the end of the session but closed down for the day.
Tech stocks led the decliners with STMicroelectronics and Infineon Technologies dropped between 3% and 4%.
Moderna Inc edged lower 1% to 137.44 euros and Swiss regulators approved the company's latest vaccine that targets the omicron variant.
Valneva SE declined 0.4% to 9.22 euros and the French drug maker reported positive late stage trial results for its Covid-19 vaccine with booster effects.
The Swiss Market index fell 1.1%or 121.72 points 10,942.16 and financials were among the leading decliners.
Credit Suisse, UBS, Givaudan, Alcon, and Richemont fell between 2% and 4%.
Movers: Bristol-Myers, Catalent, Etsy, Moderna, Pinduoduo, Walmart
Barry Adams
29 Aug, 2022
New York City
Stocks extended losses after Friday's selloff and energy prices inched higher.
Benchmark indexes eased as investors digested Friday's comments from the Federal Reserve chief and prepared for higher rates after the remaining two meetings of the policymakers in the year.
Eight-week long market rally from the lows of mid-June was powered by investors hoping economic soft landing and interest rate to even decline next year.
The S&P 500 index declined 0.6% to 4,034.10 and the Nasdaq Composite index dropped 1.0% to 12,018.90.
Tech stocks led the decliners in a broad selloff for the second day but the energy complex stock advanced after crude oil prices continued to advance on tight demand supply conditions.
The natural gas prices in Europe are still running nine times, yes nine-fold, higher to the U.S. prices on the persistent worries of Russian supply in the coming months.
Futures of crude oil rose $2.94 to $95.96 a barrel and natural gas advanced 15 cents to $9.55 a British thermal unit.
The yield on 10-year Treasury notes inched up to 3.11% and two-year notes rose to 3.41%.
In trading on Wall Street, stocks lacked direction in morning trading but sell overwhelmed buy orders.
Microsoft, Alphabet, Amazon.com, and Apple declined between 0.5% and 1.3%.
Apple Inc is scheduled to release new products at its annual gathering next week.
Analysts are anticipating the release of the iPhone versions that meets the demand from price conscious consumers and improvement in battery life.
Diamondback Energy, Exxon Mobil, Marathon Oil, Hess Corp, Occidental Petroleum, Halliburton, and Valero Energy rose between 2% and 5%.
JB Hunt, Domino's Pizza, and Bristol-Myers Squibb were among the leading decliners with a loss between 3% and 6%.
Bristol-Myers Squibb fell 6.5% to $66.85 after the drug maker said the blood thinner product it is developing in partnership with Johnson & Johnson failed to meet certain milestones in its phase 2 trial.
Milvexian, the blood thinner, is considered a key compound in the Bristol-Myers strategy to develop products before the expiry of its blockbuster blood thinner, Eliquis.
Johnson & Johnson declined 0.5% to $163.50.
Despite the setback, both companies in a joint press release said they plan to conduct more advanced tests and pursue additional research and testing.
Catalent Inc declined 6.8% to $92.88 after the drug discovery and manufacturing company's annual outlook fell shy of investors expectations.
Revenues in the fiscal fourth quarter ending in June increased 10% to $1.3 billion and net earnings rose to $184 million from $167 million a year ago.
Diluted earnings per share rose to $1.04 from 98 cents a year ago.
For fiscal year 2023, the company guided revenues in the range of $4.975 billion and $5.225 billion and adjusted net net income between $660 million and $730 million.
Etsy Inc increased 0.8% to $105.17 and the online platform operator tightened its seller's account and bank account information.
Moderna Inc increased 1.2% to $138.43 after Swiss regulators approved the company's latest vaccine that targets the omicron variant.
Pinduoduo Inc soared 16.6% to $67.14 after the China-based online commerce platform operator reported better-than-expected quarterly results.
Walmart Inc rose 1.4% to $133.49 and the retailer offered to acquire the remaining stake in the South Africa-based Massmart for $378 million.
Walmart's offer for the 47% stake of Massmart is 53% higher than Friday's close price.
Stocks On Wall Street Fall On Rate Path Worries, Bond Yields Rise
Barry Adams
29 Aug, 2022
New York City
Stocks extended losses after Friday's selloff and energy prices inched higher.
Benchmark indexes eased as investors digested Friday's comments from the Federal Reserve chief and prepared for higher rates after the remaining two meetings of the policymakers in the year.
Eight-week long market rally from the lows of mid-June was powered by investors hoping of economic soft landing and declining rates next year.
However, those hopes were dashed after the Fed chief forcefully reiterated that the inflation is "too high" and the central bank will "take forceful measures as long as necessary" to cool down rapid price increases.
The strong message sent a clear signal that the Fed may dip the economy in recession, if necessary, to cool down the high inflation to its preferred target rate of 2%.
The S&P 500 index declined 0.6% to 4,034.10 and the Nasdaq Composite index dropped 1.0% to 12,018.90.
Tech stocks led the decliners in a broad selloff for the second day but the energy complex stocks advanced after crude oil prices continued to rise on tight demand supply conditions.
The natural gas prices in Europe are still running nine times, yes nine-fold, higher to the U.S. prices on the persistent worries of Russian-supply in the coming months.
Futures of crude oil prices rose $2.94 to $95.96 a barrel and natural gas advanced 15 cents to $9.55 a British thermal unit.
The yield on 10-year Treasury notes inched up to 3.11% and two-year notes rose to 3.41%.
In trading on Wall Street, stocks lacked direction in morning but sell orders overwhelmed buy orders.
Microsoft, Alphabet, Amazon.com, and Apple declined between 0.5% and 1.3%.
Exxon Mobil, Marathon Oil, Hess Corp, and Valero Energy rose between 2% and 4%.
Moderna Inc increased 1.2% to $138.43 after Swiss regulators approved the company's latest vaccine targeting the omicron variant.
Walmart Inc rose 1.4% to $133.49 and the retailer offered to acquire the remaining stake in the South Africa-based Massmart for $378 million.
Walmart's offer for the remaining 47% stake of Massmart is 53% higher than Friday's close price.
Etsy Inc increased 0.8% to $105.17 and the online platform operator tightened verification measures for its seller's bank account information.
Pinduoduo Inc soared 16.6% to $67.14 after the China-based online commerce platform operator reported better-than-expected quarterly results.
Major Indexes Plunge 3% After Powell's Tough Talk
Barry Adams
26 Aug, 2022
New York City
Stocks on Wall Street slid after the U.S. Federal Reserve Chairman Powell reiterated the central bank's commitment in bringing down high inflation sooner than later.
In a short speech lasting eight minutes, Fed chief delivered a forceful reminder of the need to fight inflation now despite the pain it is likely to inflict on the economy.
Chairman Powell forcefully reiterated the central bank's commitment in aggressively fighting the four-decade high inflation before it entrenched and spread to a wider economy.
Powell delivered his comments at the Jackson Hole Economic Symposium, a gathering of central bankers, and said that reducing inflation will take time and will soften the labor market.
The comments were widely viewed and anticipated but the forceful reiteration only highlighted the long road ahead for the policy makers and the near-term pain for households and businesses.
"While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses.
These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain," Powell added in his prepared remarks.
Investors worried that the Fed may take longer to overpower inflation and may have to keep rates above 4% for a while from the current rate range between 2.25% and 2.50%.
"Restoring price stability will likely require maintaining a restrictive policy stance for some time.
The historical record cautions strongly against prematurely loosening policy," Chairman Powell added.
Stock markets turned sharply lower after Powell's comments and bond yields jumped above 3%.
The steady stream of sell orders escalated in the afternoon as traders digested the implications of chairman's remarks and the indexes extended losses by the minute.
At close, the S&P 500 index dropped 3.4% to 4,057.74 and the Nasdaq Composite index plunged 3.9% to 12,141.27.
In a broad selloff, only five stocks closed higher in the S&P 500 index.
For the week, the S&P 500 index declined 4% and the S&P 500 dropped 4.4%.
Futures of crude oil increased 35 cents to $92.87 a barrel but natural gas fell 6 cents to $9.31 a thermal unit.
Despite the Fed's tough rhetoric, the central bank has been widely perceived to be be lax in tackling inflation.
The consumer price index has been rising at faster than the target rate of 2% for twenty months in a row.
In short, Fed made its task harder by waiting too long.
In a sharp about-face, Powell labeled inflation as "transitory" and "temporary" while delivering comments at the same conference last year.
But today's comments were designed to send a clear message to the American people of the "pain" ahead and to markets that higher rates are here to stay for a while.
The yield on 10-year U.S. Treasury notes rose to 3.036% and on 2-year notes jumped to 3.38%.
On Wall Street, all eleven sectors closed down and investors reacted to corporate news.
Electronic Arts Inc jumped as much as 6.1% before closing up 3.6% to $132.17 after a report in Swedish media suggested that Amazon.com is likely to make an offer to acquire the game publisher as early as today.
Farfetch Ltd soared 26.4% to $12.04 after the online luxury fashion retailer reported stronger-than-anticipated quarterly results and smaller loss.
Ulta Beauty fell 1.8% to $411.48 after the company's latest quarterly results exceeded expectations and also issued a positive outlook for the year.
Gap Inc, after rising as much as 6%, declined 1.40% to 9.87 after the apparel retailer reported an unexpected quarterly profit on the sales strength at its Banana Republic chain.
European markets traded sideways but accelerated the decline after Fed chief's dire t a d tough talk.
The DAX index dropped 2.2% to 12,971.47, the CAC-40 index declined 1.7% to 6,274.26, and the FTSE 100 index fell 0.7% to 7,427.31.
For the week, the indexes dropped between 1.3% and 3.0%.
Moreover, weakening in consumer confidence in the euro zone's largest economy also unnerved the market.
Germany's forward looking consumer confidence index declined further in September to -36.5 from -30.9 in August, according to the survey released by the market research group Gfk on Friday.
However, French consumer confidence improved unexpectedly in August after falling for seven months in a row, according to survey results released by the French statistical office Insee on Friday.
Micro Focus International soared 93% to 519.0 pence in London trading after the Canada-based OpenText agreed to acquire the enterprise software maker for $6 billion including debt.
OpenText declined 12.7% to $32.73.
Centrica Plc increased 0.6% to 81.90 pence after the U.K. energy regulator Ofgem lifted the cap on household energy, electricity and natural gas bill by 80% to 3,549 pounds a year from the current 1,971 pounds.
The price cap for pre-payment meters was introduced in 2019 to protect customers from wild swings in energy prices but about 29 suppliers have gone under this year after the surge in energy prices.
About 24 million households or 85% of the U.K. population are expected to be affected after the implementation of the price revision on October 1.
European Markets Extend Weekly Losses On Rate-hike Jitters
Barry Adams
26 Aug, 2022
New York City
European markets traded sideways but accelerated the decline after the comments from Fed Chairman Powell.
In an eight minute short speech, Chairman Powell delivered a forceful reminder of the need to fight inflation now despite the pain it is likely to inflict on the economy.
Chairman Powell forcefully reiterated the central bank's commitment in aggressively fighting the four-decade high inflation before it entrenched and spread to a wider economy.
Powell delivered his comments at the Jackson Hole Economic Symposium, a gathering of central bankers, and said that reducing inflation will take time and will soften the labor market.
The comments were widely viewed and anticipated but the forceful reiteration only highlighted the long road ahead for the policy makers and the near-term pain for households and businesses.
"While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses.
These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain," Powell added in his prepared remarks.
Stock markets turned sharply lower after Powell's comments and bond yields jumped above 3%.
Moreover, weakening in consumer confidence in the euro zone's largest economy also unnerved the market.
Germany's forward looking consumer confidence index declined further in September to -36.5 from -30.9 in August, according to the survey released by the market research group Gfk on Friday.
However, French consumer confidence improved unexpectedly in August after falling for seven months in a row, according to survey results released by the French statistical office Insee on Friday.
The DAX index dropped 2.2% to 12,971.47, the CAC-40 index declined 1.7% to 6,274.26, and the FTSE 100 index fell 0.7% to 7,427.31.
For the week, the indexes dropped between 1.3% and 3.0%.
Market indexes in New York continued to slide in the afternoon and closed at the lows of the day.
The S&P 500 index dropped 3.4% to 4,057.74 and the Nasdaq Composite index plunged 3.9% to 12,141.27.
Anglo American gained 1.1% to 2,951.0 pence after Peru abandoned its plan to impose additional tax on the mining industry.
Micro Focus International soared 93% to 519.0 pence in London trading after the Canada-based OpenText agreed to acquire the enterprise software maker for $6 billion including debt.
Canada-based OpenText declined 12.7% to $32.73 in New York trading.
Centrica Plc increased 0.6% to 81.90 pence after the U.K. energy regulator Ofgem lifted the cap on household energy, electricity and natural gas bill by 80% to 3,549 pounds a year from the current 1,971 pounds.
The price cap for pre-payment meters was introduced in 2019 to protect customers from wild swings in energy prices but about 29 suppliers have gone under this year after the surge in energy prices.
About 24 million households or 85% of the U.K. population are expected to be affected after the implementation of price revision from October 1.
Carlsberg A.S. declined 0.3% to 965.80 Danish kroner after the Danish brewer said it halt or "significantly lower" beer production in Poland.
Workday Q2 Revenues Rise 22%
Scott Peters
26 Aug, 2022
New York City
Workday Inc increased 2.7% to $166.83 after the human resource software company said the company is still closing new deals.
"We continue to see a strong global demand for our products," said Aneel Bhusri, co-founder, co-CEO, and chairman.
Fiscal year second quarter total revenues increased 21.9% to $1.54 billion.
The company swung to a net loss of $64.2 million from a profit of $105.7 million a year ago.
Diluted loss per share in the quarter was 25 cents compared to a profit of 43 cents a year ago.
In the second quarter, operating cash flow fell sharply to $114.4 million from $198.5 million a year ago.
Cash, cash equivalents, and marketable securities rose to $6.29 billion at the end of the quarter, from $3.6 billion a year ago.
Ulta Same Store Sales Growth Plunges to 14%
Scott Peters
26 Aug, 2022
New York City
Ulta Beauty Inc fell 1.3% to $413.88 after the company's latest quarterly results exceeded expectations and also issued a positive outlook for the year.
Fiscal year second quarter revenues increased to $2.3 billion from $1.97 billion a year ago.
Same store sales growth plunged to 14.4% from 56.3% a year ago as stimulus and pandemic relief payment lapped.
Gross profit as a percentage of sales was 40.4% compared to 40.6% a year ago.
Net income increased 17.8% to $295.7 million compared to $250.9 million and diluted earnings rose to $5.70 from $4.56 a year ago.
The cosmetic retailer and beauty salon lifted annual sales outlook to between $9.65 billion and $9.75 billion from the previous estimate between $9.35 billion and $9.55 billion.
Gap Inc Focuses On Trimming Inventories, Withdraws 2022 Guidance
Scott Peters
26 Aug, 2022
New York City
Gap Inc, after rising as much as 6%, declined 1.20% to 9.84 after the apparel retailer reported rising sales at its Banana Republic chain.
Second quarter revenues fell 8% to $3.86 billion and comparable sales across all divisions declined 10%.
Merchandise margin declined 850 basis points on inventories impairment charges and incremental air freight costs.
Gap Inc swung to a net loss of $49 million from a profit of $258 million and swung to a diluted loss per share of 13 cents from a diluted profit of 67 cents a year ago.
Gap also withdrew its 2022 outlook citing macroeconomic challenges, company management changed and CEO transition.
The retailer also added that growth in inventories in the third quarter "to moderate substantially" and the company is targeting negative inventories by the end of last year "as a result of its inventory actions, reduction of receipts, and anniversary of higher in-transit levels last year."
Farfetch Operating Loss Expands
Scott Peters
26 Aug, 2022
New York City
Farfetch Ltd soared 25.1% to $11.94 after the online luxury fashion retailer reported stronger-than-anticipated quarterly results.
The luxury fashion platform operator said revenues in the second quarter increased to $499.4 million from $439.4 million a year ago.
Gross profit margin increased to 46.2% from 44% a year ago.
Operating loss increased to $167.6 million from $150.3 million a year ago and diluted loss per share rose to 50 cents from 31 cents a year ago.
Gross merchandise value increased 1.3% in the second quarter to $1.20 billion from $1.01 billion a year ago.
After the close of the quarter, on Aug 24, Swiss luxury house Richemont agreed to sell 47.5% stake in YNAP to Farfetch in exchange of 50 million shares in the company.
Yoox-Net-A-Porter and Richemont Maison will use Farfetch technology platform after the completion of the transaction.