Market Update
Cisco Quarterly Net Falls 6%, Estimates 2023 Revenues Growth Between 4% and 6%
Scott Peters
18 Aug, 2022
New York City
Cisco Systems increased 6.8% to $49.85 after the networking equipment maker reported better-than-expected revenues and earnings.
Cisco said revenues in the fiscal year fourth quarter ending in July were flat at $13.1 billion and net income declined 6% to $2.8 billion from a year ago.
Diluted earnings per share fell to 68 cents from 71 cents a year ago.
The networking gear maker estimated revenues in the first quarter ending in October to increase between 2% and 4% and earnings per share between 64 cents and 68 cents.
Cisco also estimated full-year revenues to rise between 4% and 6% and earnings per share to fall between $2.77 and $2.88.
In the fourth quarter Cisco returned $4.0 billion to stockholders through share buybacks and dividends.
Cisco paid a cash dividend of $0.38 per common share or $1.6 billion, and repurchased approximately 54 million shares of common stock under the current repurchase program at an average price of $44.02 a share for an aggregate purchase price of $2.4 billion.
The remaining authorized amount for stock repurchases under the program is $15.2 billion with no termination date.
In the fiscal year ending in July 2022, total revenues increased 3% to $51.6 billion net income rose 12% to $11.8 billion, an increase of 12%.
Earnings per share increased 13% to $2.82.
Weekly Jobless Claims Fall 2,000
Brian Turner
18 Aug, 2022
New York City
Initial jobless claims at the last week edged higher but remained near the high for the year so far.
Jobless claims fell 2,000 from the previous week to 250,000 for the week ending on August 13, the Labor Department reported Thursday.
The four-week moving average of claims declined 2,750 to 246,750.
The previous week's claims were revised lower 10,000 to 252,00.
Home Sales Decline for 6th Month In a Row
Brian Turner
18 Aug, 2022
New York City
The sale of existing homes declined 5.9% in July from June and dropped 20% from a year ago as home prices remain stubbornly high, the National Association of Realtor reported Thursday.
Existing-home sales fell for the sixth month in a row to a seasonally adjusted annual rate of 4.81 million.
Median home price fell $100,000 from June but rose 10.8% from a year ago to $403,000.
"The ongoing sales decline reflects the impact of the mortgage rate peak of 6% in early June," said NAR Chief Economist Lawrence Yun.
"Home sales may soon stabilize since mortgage rates have fallen to near 5%, thereby giving an additional boost of purchasing power to home buyers," Yun added.
Home sales may have fallen but this is still a fast moving market.
Eighty-two percent of homes sold in July were on the market for less than a month and a typical home was on the market for 14 days, matching June but lower than 17 days a year ago.
The 14-day home sale time is the shortest on record since the NAR began keeping the records in May 2011.
U.S. Stocks Waver, Home Sales Decline for 6th Month In a Row
Barry Adams
18 Aug, 2022
New York City
Benchmark indexes rebounded from early doldrums after investors digested a fresh batch of earnings and economic news.
Initial jobless claims at the last week edged higher but remained near the high for the year so far.
Jobless claims fell 2,000 from the previous week to 250,000 for the week ending on August 13, the Labor Department reported Thursday.
The four-week moving average of claims declined 2,750 to 246,750.
The sale of existing homes declined 5.9% in July from June and dropped 20% from a year ago as home prices remain stubbornly high, the National Association of Realtor reported Thursday.
Existing-home sales fell for the sixth month in a row to a seasonally adjusted annual rate of 4.81 million.
Median home price fell $100,000 from June but rose 10.8% from a year ago to $403,000.
"The ongoing sales decline reflects the impact of the mortgage rate peak of 6% in early June," said NAR Chief Economist Lawrence Yun.
"Home sales may soon stabilize since mortgage rates have fallen to near 5%, thereby giving an additional boost of purchasing power to home buyers," Yun added.
Home sales may have fallen but this is still a fast moving market.
Eighty-two percent of homes sold in July were on the market for less than a month and a typical home was on the market for 14 days, matching June but lower than 17 days a year ago.
The 14-day home sale time is the shortest on record since the NAR began keeping the records in May 2011.
The S&P 500 index edged up 0.3% to 4,286.09 and the Nasdaq Composite index rose 0.4% to 12,990.70
Futures of crude oil increased $1.54 to $89.64 and natural gas rose a fraction to $9.25 a thermal unit.
The yield on 10-year Treasury notes decreased to 2.84% and 2-year notes fell to 3.22%.
Cisco Systems increased 6.8% to $49.85 after the networking equipment maker reported better-than-expected revenues and earnings.
Cisco said revenues in the fiscal year fourth quarter ending in July were flat at $13.1 billion and net income declined 6% to $2.8 billion from a year ago.
Diluted earnings per share fell to 68 cents from 71 cents a year ago.
The networking gear maker estimated revenues in the first quarter ending in October to increase between 2% and 4% and earnings per share between 64 cents and 68 cents.
Cisco also estimated full-year revenues to rise between 4% and 6% and earnings per share to fall between $2.77 and $2.88.
Kohl's Corporation declined 4.8% to $32.20 after the retailer said second quarter comparable sales decreased 7.7% and net sales decreased 8.5% to $4.09 billion.
Net income in the period plunged to $143 million from $382 million a year ago.
Diluted earnings per share declined to $1.11 from $2.48 a year ago.
Kohl's revised lower its sales decline to range between 5% and 6% and earnings per share in the range between $2.80 and $3.20 excluding non-recurring items.
BJ's Wholesale Club Holdings Inc increased 8.4% to $74.90 after the company said total comparable club sales increased 19.8% and rose 7.6% excluding gasoline sales from a year ago.
Total sales increased 22.4% to $5 billion and membership fees rose 11.3% to $98.7 million.
Net income increased 27% to $141 million from $111 million a year ago and diluted earnings per share rose to $1.03 from 80 cents a year ago.
BJ's repurchased 353,000 shares of its common stock, totaling $22.8 million in the second quarter.
Fed Minutes Show Commitment to Lower Inflation
Brian Turner
17 Aug, 2022
New York City
Federal Reserve policymakers are less likely to step away from hiking rates until inflation declined substantially, showed the latest minutes released for the meeting held in late July released today.
The policymakers at the last Fed's meeting discussed the need to bring down inflation but some members also worried that the Fed may overshoot on its rate hike program hurting the economy.
Policymakers noted that the recent decline in gasoline prices could not be relied on providing the basis for sustained inflation in the long run. as these prices could quickly rebound.
"Participants agreed that there was little evidence to date that inflation pressures were subsiding.
They judged that inflation would respond to monetary policy tightening and the associated moderation in economic activity with a delay and would likely stay uncomfortably high for some time.
Participants also observed that in some product categories, the rate of price increase could well pick up further in the short run, with sizable additional increases in residential rental expenses being especially likely," the minutes noted.
July Retail Sales Held Steady as Gasoline Stations Sales Fell
Brian Turner
17 Aug, 2022
New York City
Retail sales adjusted for seasonal factors but not for price variations were flat in July compared to June but increased 10.3% from a year ago, the Census Bureau reported Wednesday.
Retail sales in July , excluding auto and gasoline, increased 0.7% from the previous month and rose 9.3% from a year ago.
Gasoline stations sales were up 39.9% from a year ago, while sales at non-store retailers were up 20.2% from last year.
Gasoline station sales in July fell 1.8% from the previous month.
The August 2022 Advance Monthly Retail report is scheduled for release on September 15, 2022 at 8:30 a.m. EDT.
Stocks Close Lower as Investors Review Fed Minutes
Barry Adams
17 Aug, 2022
New York City
Stocks lacked direction in early trading after advancing for five days in a row and investors focused on the latest batch of retail earnings.
Federal Reserve policymakers are less likely to step away from hiking rates until inflation declined substantially, the latest minutes released for the meeting held in late July released today.
The policymakers at the last Fed's meeting discussed the need to bring down inflation but some members also worried that the Fed may overshoot on its rate hike program hurting the economy.
Policymakers noted that the recent decline in gasoline prices could not be relied on providing the basis for sustained inflation in the long run. as these prices could quickly rebound.
"Participants agreed that there was little evidence to date that inflation pressures were subsiding.
They judged that inflation would respond to monetary policy tightening and the associated moderation in economic activity with a delay and would likely stay uncomfortably high for some time.
Participants also observed that in some product categories, the rate of price increase could well pick up further in the short run, with sizable additional increases in residential rental expenses being especially likely," the minutes noted.
On another note, housing market turmoil is likely to continue for a while after mortgage applications dropped to a two-decade low.
Total mortgage applications volume declined 2% in the last week from the previous week, according to the Mortgage Bankers Association.
Mortgage applications declined 1% from the previous week and dropped 18% from a year ago as more buyers walk away from home contracts or drop out of the housing market.
Mortgage applications are running at a 22-year low.
The average contract interest for 30-year fixed-rate mortgages declined to 5.45% from 5.47% in the previous week but higher than 3.0% from a year ago.
The loan origination fee fell to 0.57 points from 0.80 points a year ago for loans with 20% down payment.
Retail sales adjusted for seasonal factors but not for price variations were flat in July compared to June but increased 10.3% from a year ago, the Census Bureau reported Wednesday.
Futures of crude oil edged up 76 cents to $87.29 a barrel and natural gas decreased 14 cents to $9.18 a thermal unit.
The S&P 500 index fell 0.7% to 4,274.09 and the Nasdaq Composite index declined 1.3% to 12,938.12.
The yield on 10-year Treasury notes increased to 2.90% and 2-year yield notes advanced to 3.28%.
Target Corporation declined 2.7% to $175,34 after the retailer reported a sharp decline in earnings after the company marked down items to clear excess inventories.
Second quarter revenues increased 3.5% to $26.0 billion from $25.2 billion a year ago.
Net income in the quarter plunged to $183 million from $1.82 billion a year ago. Diluted earnings per share dropped to 39 cents from $3.65 a year ago.
Target reiterated its prior guidance for full-year revenue growth in the low- to mid-single digit range, and an operating margin rate in a range around 6% in the second-half of the year.
Lowe's Companies increased 0.6% to $215.75 after the home improvement retailer said second quarter revenues decreased to $27.5 billion from $27.6 billion a year ago.
Second quarter net income was flat at $3 billion and diluted earning per share increased to $4.68 from $4.27 a year ago.
European Markets Drop, Euro Zone Growth Slows, UK Inflation Accelerates
Bridgette Randall
17 Aug, 2022
Frankfurt
Market indexes in Europe closed down after a fresh batch of data slowing growth in the region and rising inflation in the U.K.
The economy in the euro area expanded at 0.6% in the second quarter, faster than the 0.5% growth in the first quarter, the statistics agency eurostat reported Wednesday.
The economic expansion was slower than previously estimated at 0.7% in the preliminary report released on July 29.
On an annual basis, the revised economic growth in the second quarter fell to 3.9% from 5.4% in the first quarter rate. The annual growth was revised lower from the previous estimate of 4%.
Consumer prices accelerated in July and inflation perked up to 10.1%, a four-decade high, from 9.4% in June, said the Office for National Statistics Wednesday.
On a monthly basis, consumer prices rose 0.6% in July after rising at 0.8% in June.
"Food prices rose notably, particularly bakery products, dairy, meat and vegetables, which was also reflected in higher takeaway prices," said the ONS Chief Economist Grant Fitzner.
Home prices in the U.K. rose at 7.8% annual rate in June after rising at 12.8% in May, a separate report from the ONS noted today.
The average home prices increased 20,000 pounds from a year ago to 286,000 pounds in June.
The DAX index declined 2.1% to 13,626.71, the CAC-40 index dropped 1% to 6,528.32, and the FTSE 100 index fell 0.3% to 7,515.75.
Cineworld Group Plc plunged 60% to a record low 8.25 pence after the operator of movie theaters said audience sizes are low because of "limited" movie releases.
"Despite a gradual recovery of demand since reopening in April 2021, recent admission levels have been below expectations.
These lower levels of admissions are due to a limited film slate that is anticipated to continue until November 2022 and are expected to negatively impact trading and the Group's liquidity position in the near term," noted the company in its trading update released Wednesday.
The company is looking to deleverage its balance sheet and cautioned "any deleveraging transaction will likely result in very significant dilution of existing equity interests in Cineworld."
The company operated 9,189 screens at 750 sites around the world with 68% screens located in the United States.
Uniper SE declined 12% to 6.81 euros after the company reported first-half loss of 12 billion euros after Russia reduced its delivery of natural gas.
The utility company received 15 billion euros of capital injection from the German government last month.
Sanofi SA declined 5.6% to 81.67 euros after the French drugmaker discontinued its breast cancer treatment, amcenestrant, after the drug was ineffective in several trials.
Target Quarterly Earnings Plunge On Higher Markdowns
Scott Peters
17 Aug, 2022
New York City
Target Corporation declined 3.3% to $174,14 after the retailer reported a sharp decline in earnings after the company marked down items to clear excess inventories.
Second quarter revenues increased 3.5% to $26.0 billion from $25.2 billion a year ago.
Comparable sales grew 2.6% in the second quarter, reflecting comparable store sales growth of 1.3% and comparable digital sales growth of 9.0%.
Higher gasoline prices drove many customers to shop online.
Second quarter gross margin plunged to 21.5%, compared with 30.4% a year ago.
"This year's gross margin rate reflected higher markdown rates, driven primarily by inventory impairments and actions taken to address lower-than-expected sales in discretionary categories, as well as higher merchandise, inventory shrink, and freight costs," the company's earnings release noted.
Net income in the quarter plunged to $183 million from $1.82 billion a year ago. Diluted earnings per share dropped to 39 cents from $3.65 a year ago.
Target reiterated its prior guidance for full-year revenue growth in the low- to mid-single digit range, and an operating margin rate in a range around 6% in the second-half of the year.
In the second quarter, Target paid dividends of $417 million compared to $336 million a year ago, a 32.4% increase in the dividend per share, partially offset by a decline in average share count.
Target repurchased $2.6 billion worth of its shares through the accelerated share repurchase program which ended in June, reflecting the retirement of 12.5 million shares of common stock at an average price of $211.58.
The retailer still have $9.7 billion available in its stock repurchase program authorized in August 2021 by the company's board of directors.
TJX's U.S. Comparable Same Store Sales Drop 5%
Scott Peters
17 Aug, 2022
New York City
TJX Companies Inc increased 3.9% to $69.30 and the discount retailer lowered its annual revenues outlook and reported same store sales declined.
The parent of Marshalls, Home Goods, and T.J. Maxx retail chains said second quarter revenues declined to $11.8 billion from $12.1 billion.
Net income increased to $809.3 million from $785.6 million a year ago and diluted earnings per share increased to 29 cents from 26 cents a year ago.
U.S. comparable sales declined 5% after rising 21% a year ago.
Second quarter U.S. comparable sales at Marshalls and T.J. Maxx chains declined 2% after rising 18% in the period a year ago and at Home Goods declined 13% after rising 36% in the quarter a year ago.
Inventories at the end of the quarter increased to $7.1 billion from $5.1 billion at the end of the January 2022 when the fiscal year 2022 ended.
Lowe's Issued Cautious Annual Outlook
Scott Peters
17 Aug, 2022
New York City
Lowe's Companies increased 1.6% to $217.45 after the home improvement retailer issued a cautious outlook and cited strong macroeconomic headwinds.
Lowe's said second quarter revenues edged down to $27.5 billion from $27.6 billion a year ago.
Comparable sales in the quarter declined 0.3%.
Comparable sales for the U.S. home improvement business increased 0.2% for the second quarter.
DIY sales were impacted by the shortened spring and lower demand in certain discretionary categories partially offset by a 13% increase in Pro customer sales.
Second quarter net income was flat at $3 billion and diluted earning per share increased to $4.68 from $4.27 a year ago.
During the quarter, Lowe's repurchased approximately 21.6 million shares for $4.0 billion and paid $524 million in dividends.
The company estimated full-year 2022 total and comparable sales toward the bottom end of its outlook range, and expects operating income and diluted earnings per share toward the top end of its outlook range.
Including the 53rd week, Lowe's estimates total sales between $97 billion and $99 billion and comparable sales between the range of 1% decline and increase.
Diluted earnings per share are estimated to fall between $13.10 and $13.60 and repurchase a total of $12 billion of its shares.
Krispy Kreme's Quarterly Loss Shrank
Scott Peters
17 Aug, 2022
New York City
Krispy Kreme Inc declined 11.8% to $12.80 after the doughnut chain operator reported weaker-than-expected revenues and earnings.
Second quarter revenues increased 7.5% to $375.2 million and net loss declined to $2.4 million from $15.0 million a year ago.
Revenues in the U.S. and Canada increased 8.5% to $250.5 million.
Diluted loss per share fell to 2 cents from 15 cents a year ago.
Krispy Kreme lowered its 2022 revenues outlook in the range between $1.49 billion and $1.52 billion from the previous estimate between $1.53 billion and $1.56 billion.
Compass Net Loss Soars, Lowers Annual Outlook
Scott Peters
17 Aug, 2022
New York City
Compass Inc declined 12.7% to $3.87 after the real estate broker's quarterly loss expanded and the company lowered it annual revenue estimate.
Second quarter revenues increased 4% to $2.0 billion and net loss soared to $101 million from $7 million a year ago.
Compass guided third quarter revenues between $1.4 billion and $1.5 billion and full-tear 2022 revenues between $6.15 billion and $6.45 billion.
The 2022 revenues estimate was significantly lowered from the previous estimate between $7.6 billion and $8.0 billion released at the time of first quarter results.
Movers: Bed Bath & Beyond, Compass, Krispy Kreme, Lowe's, Target, TJX
Barry Adams
17 Aug, 2022
New York City
Stocks lacked direction in early trading after advancing for five days in a row and investors focused on the latest batch of retail earnings.
Futures of crude oil edged up $1.42 to $87.97 a barrel and natural gas decreased 9 cents to $9.13 a thermal unit.
The S&P 500 index fell 0.8% to 4,269.91 and the Nasdaq Composite index declined 1.5% to 12,908.96.
The yield on 10-year Treasury notes increased to 2.88% and 3-year yield notes advanced to 3.32%.
Bed Bath & Beyond soared 21.5% to $25.10 and the retailer extended gains to more than 400% after the Reddit message board followers piled in.
Bed Bath stock has closed up every day for three weeks in a row.
Compass Inc declined 9.5% to $4.03 after the real estate broker said second quarter revenues increased 4% to $2.0 billion and net loss soared to $101 million from $7 million a year ago.
Compass guided third quarter revenues between $1.4 billion and $1.5 billion and full-tear 2022 revenues between $6.15 billion and $6.45 billion.
The 2022 revenues estimate was significantly lowered from the previous estimate between $7.6 billion and $8.0 billion released at the time of first quarter results.
Krispy Kreme Inc declined 11.8% to $12.80 after the doughnut chain operator reported weaker-than-expected revenues and earnings.
Second quarter revenues increased 7.5% to $375.2 million and net loss declined to $2.4 million from $15.0 million a year ago.
Diluted loss per share fell to 2 cents from 15 cents a year ago.
Krispy Kreme lowered its 2022 revenues outlook in the range between $1.49 billion and $1.52 billion from the previous estimate between $1.53 billion and $1.56 billion.
Lowe's Companies increased 1.6% to $217.45 after the home improvement retailer said second quarter revenues decreased to $27.5 billion from $27.6 billion a year ago.
Second quarter net income was flat at $3 billion and diluted earning per share increased to $4.68 from $4.27 a year ago.
Target Corporation declined 3.3% to $174,14 after the retailer reported a sharp decline in earnings after the company marked down items to clear excess inventories.
Second quarter revenues increased 3.5% to $26.0 billion from $25.2 billion a year ago.
Net income in the quarter plunged to $183 million from $1.82 billion a year ago. Diluted earnings per share dropped to 39 cents from $3.65 a year ago.
Target reiterated its prior guidance for full-year revenue growth in the low- to mid-single digit range, and an operating margin rate in a range around 6% in the second-half of the year.
TJX Companies Inc increased 3.9% to $69.30 after the discount retailer lowered its annual revenues outlook.
The parent of Marshalls, Home Goods, and T.J. Maxx retail chains said second quarter revenues declined to $11.8 billion from $12.1 billion.
Net income increased to $809.3 million from $785.6 million a year ago and diluted earnings per share increased to 29 cents from 26 cents a year ago.
Second quarter U.S. comparable sales at Marshalls and T.J. Maxx chains declined 2% after rising 18% in the period a year ago and at Home Goods declined 13% after rising 36% in the quarter a year ago.
U.S. Stocks Turn Lower, July Retail Sales Flat
Barry Adams
17 Aug, 2022
New York City
Stocks lacked direction in early trading after advancing for five days in a row and investors focused on the latest batch of retail earnings.
The Federal Reserve is set to release the latest minutes of meetings as investors look for insights and clues for the size of next rate hikes.
Total mortgage applications volume declined 2% in the last week from the previous week, according to the Mortgage Bankers Association.
Mortgage applications declined 1% from the previous week and dropped 18% from a year ago as more buyers walk away from home contracts or drop out of the housing market.
Mortgage applications are running at a 22-year low.
The average contract interest for 30-year fixed-rate mortgages declined to 5.45% from 5.47% in the previous week but higher than 3.0% from a year ago.
The loan origination fee fell to 0.57 points from 0.80 points a year ago for loans with 20% down payment.
Retail sales adjusted for seasonal factors but not for price variations were flat in July compared to June but increased 10.3% from a year ago, the Census Bureau reported Wednesday.
Futures of crude oil edged up $1.42 to $87.97 a barrel and natural gas decreased 9 cents to $9.13 a thermal unit.
The S&P 500 index fell 0.8% to 4,269.91 and the Nasdaq Composite index declined 1.5% to 12,908.96.
The yield on 10-year Treasury notes increased to 2.88% and 3-year yield notes advanced to 3.32%.
Target Corporation declined 3.3% to $174,14 after the retailer reported a sharp decline in earnings after the company marked down items to clear excess inventories.
Second quarter revenues increased 3.5% to $26.0 billion from $25.2 billion a year ago.
Net income in the quarter plunged to $183 million from $1.82 billion a year ago. Diluted earnings per share dropped to 39 cents from $3.65 a year ago.
Target reiterated its prior guidance for full-year revenue growth in the low- to mid-single digit range, and an operating margin rate in a range around 6% in the second-half of the year.
Lowe's Companies increased 1.6% to $217.45 after the home improvement retailer said second quarter revenues decreased to $27.5 billion from $27.6 billion a year ago.
Second quarter net income was flat at $3 billion and diluted earning per share increased to $4.68 from $4.27 a year ago.