Market Update
European Markets Drop 1%, German Production Rises 0.7%
Bridgette Randall
08 Jun, 2022
New York City
In European trading, market indexes declined after the World Bank and OECD lowered global growth outlook.
The World Bank lowered its global growth estimate to 2.9% from the previous estimate of 4.1% in January.
Separately, the Organization for Economic Cooperation and Development also trimmed its outlook to 3% from the previous estimate of 4.5% in December.
Both institutions cited rising food and energy prices, the ongoing war in Ukraine, and extended lockdown in China impacting global growth rates.
Industrial production in Germany rose less than expected 0.7% in April from March but fell 2.2% from a year ago.
March production decline was revised to 3.7% decline from the previous estimate of 3.9% fall, according to the data released by the statistics office Destatis.
The DAX index fell 0.7% to 14,455.67, CAC 40 index declined 0.9% to 6,442.12, and the FTSE 100 index dropped 0.6% to 7,555.26.
The eurozone economic growth in the first quarter was revised higher to 0.6% from the previous quarter and 5.4% increase on an annual basis.
Credit Suisse dropped 6.7% to 6.26 francs after the company said it is likely to report a loss in the second quarter on "challenging market conditions."
The financial group is also looking to cut staff amid dwindling profitability and slowing activities.
Pernod Ricard SA declined 2.8% to 176.75 euros and the spirit and wine maker said it is looking to digital channels and boost sales.
Schneider Electric declined 1.7% to 127.62 euros after the French electric automation and energy management company said it has agreed to sell Eutotherm business unit to the U.S. based Watlow Electric Manufacturing Company.
Financial terms of the deal were not disclosed.
Inditex jumped 4.8% to 23.29 euros after the textile and apparel maker said first quarter profit increased 80% to 760 million euros and sales jumped 36% to 6.7 billion euros.
U.S. Stocks Decline, Global Growth Estimates Lowered
Barry Adams
08 Jun, 2022
New York City
After two days of gains, stock market indexes took a breather awaiting inflation data on Friday.
The World Bank lowered its global growth estimate to 2.9% from the previous estimate of 4.1% in January.
Separately, the Organization for Economic Cooperation and Development also trimmed its outlook to 3% from the previous estimate of 4.5% in December.
Both institutions cited rising food and energy prices, the ongoing war in Ukraine, and extended lockdown in China impacting global growth rates.
Futures of the S&P 500 index edged down 0.5% to 4,137.75 and the Nasdaq Composite index decreased 0.6% to 12,634.0.
Nervous investors are looking for clues whether the economy is slowing down faster than anticipated and how consumers are reacting to higher fuel and food prices.
Investors also reacted to the latest earnings news.
Ollie's Bargain Outlet declined 6.8% to $50.99 after the deep discount retailer said net sales in the first quarter ending in April declined 10.1% to $406.7 million on 17.3% fall in comparable sales.
Net income decreased 77.3% to $12.5 million and net income per diluted share decreased 76.2% to $0.20 from a year ago.
Campbell Soup increased 2.1% to $47.60 after the food products company said sales in the third quarter ending on May 1 increased 7% to $2.1 billion and net income rose 17.5% to $188.0 million.
For the full-year the company revised higher its sales outlook to increase between flat and 1% from the previous estimate of flat to decline of 2%.
In European trading, market indexes declined after the World Bank and OECD lowered global growth outlook.
Industrial production in Germany rose less than expected 0.7% in April from March but fell 2.2% from a year ago.
March production decline was revised to 3.7% decline from the previous estimate of 3.9% fall, according to the data released by the statistics office Destatis.
The DAX index fell 0.7% to 14,455.67, CAC 40 index declined 0.9% to 6,442.12, and the FTSE 100 index dropped 0.6% to 7,555.26.
The eurozone economic growth in the first quarter was revised higher to 0.6% from the previous quarter and 5.4% increase on an annual basis.
Credit Suisse dropped 6.7% to 6.26 francs after the company said it is likely to report a loss in the second quarter on "challenging market conditions."
The financial group is also looking to cut staff amid dwindling profitability and slowing activities.
Pernod Ricard SA declined 2.8% to 176.75 euros and the spirit and wine maker said it is looking to digital channels and boost sales.
Schneider Electric declined 1.7% to 127.62 euros after the French electric automation and energy management company said it has agreed to sell Eutotherm business unit to the U.S. based Watlow Electric Manufacturing Company.
Financial terms of the deal were not disclosed.
Inditex jumped 4.8% to 23.29 euros after the textile and apparel maker said first quarter profit increased 80% to 760 million euros and sales jumped 36% to 6.7 billion euros.
Trade Deficit In April Narrows After Imports Drop
Brian Turner
07 Jun, 2022
New York City
The U.S. trade deficit in April declined to $87.1 billion from the revised $107.7 billion deficit in March.
The first estimate of deficit in March was $109.8 billion.
The goods deficit decreased $19.1 billion in April to $107.7 billion and the services surplus increased $1.5 billion to $20.7 billion.
Exports of goods and services rose 3.5% to $252.6 billion and imports declined 3.4% to $339.7 billion.
U.S. Indexes Advance 1% After Volatile Session
Barry Adams
07 Jun, 2022
New York City
Stocks were under pressure after Target issued an earnings alert highlighting inventory challenges but managed to shake off recession worries and climbed higher.
The S&P 500 index increased 0.95% to 4,160.50 and the Nasdaq Composite index advanced 0.94% to 12,175.25.
Target Inc dropped 2.02% to $156.65 after the diversified retailer announced a plan to lower inventories of unwanted products, cancel orders, and markdown excess products.
The company had warned about its inventories problems during the release of latest quarter earnings.
The swift action to deal with inventories will come at the expense of earnings and operating margins.
The retailer lowered its operating margin estimate to 2%, lower than the previous estimate of 5.3%, and estimated a second-half operating margin of 6%.
The company reiterated its full-year revenue increase in the low- to mid-single digit and expects to maintain or gain market share in 2022.
After the Target announcement, Walmart Inc dropped 1.3% to $123.30.
Stocks closed higher on Tuesday but retailers remained under pressure. Energy stocks led the gainers again after crude oil prices advanced to a new 8-year high.
Crude oil futures of immediate month gained $1.50 to $120.05 a barrel and natural gas futures edged up a cent to $9.33 a unit.
Investors are still confronting rising energy prices and elevated inflation pressures and assessing the health of the U.S. economy and consumers.
The yield on 10-year Treasury notes decreased to 2.98%.
The U.S. trade deficit shrank in April to $87.1 billion after imports fell on account of supply chain disruptions and lockdowns in China.
Exports of goods and services rose 3.5% to $252.6 billion and imports declined 3.4% to $339.7 billion.
Apple Inc advanced 1.8% to $148.78 after the company released several new products at its annual conference for developers.
J.M. Smucker jumped 5.7% to $130.31 after the pet food, coffee, and other food products maker reported 6% in net sales on 10% price increase across all business segments.
Net income jumped 37% to $202.1 million.
Investors are looking ahead to consumer price index data on Friday and hoping that the inflation measure shows a decline offering a respite to consumers and investors.
In Europe, market indexes turned lower after German factory orders declined for the third month in a row in April.
The German statistics office said orders fell 2.7% from March and plunged 6.2% from a year ago on weak foreign demand and harsh China lockdown measures.
A separate report from the German Machinery Industry Trade Association said machinery orders declined 7% in April from a year ago on slower growth demand from China, supply chain disruptions, and the Ukraine war.
The orders declined for the second month in a row and domestic orders plunged 17% and orders from foreign markets fell 2%.
The DAX index declined 0.7% to 14,556.22, the CAC-40 dropped 0.7% to 6,500.35, and the FTSE 100 index fell 0.1% to 7,598.93.
The U.K. Prime Minister Boris Johnson survived a no-confidence vote after 211 of 359 Conservative Party members of parliament expressed confidence in his premiership.
Prime Minister Johnson led the party to its largest victory in many decades but with multiple scandals voters discontent is rising and several members of his party are looking for a leadership change.
However, Prime Minister Johnson has a tough road ahead in keeping his job as 148 members expressed dissatisfaction with his leadership, just shy of majority 180 needed to remove him from his office.
J.M. Smucker Price Increases Drive Quarterly Sales and Income Higher
Scott Peters
07 Jun, 2022
New York City
J.M. Smucker Company, the maker of food products said price increase across all business segments helped to offset product recall costs.
Fiscal 2022 fourth quarter ending in April sales increased 6% to $2.03 billion and net income increased 37% to $202.1 million.
Diluted earnings per share increased to $1.88 from $1.35 a year ago.
The company lifted its quarterly dividend to 99 cents from 90 cents a year ago.
Net sales increase was driven by 10% increase in prices across all product segments partially offset by 1% decline in volume and product mix and a 1% unfavorable impact of estimated customer returns related to the Jif peanut butter product recall.
The current quarter results reflect the divestiture of dry pet food, natural beverage and grain businesses.
Gross profit decreased 9% to $69.0 million, including 7% unfavorable impact of unsaleable Jif peanut butter inventory and estimated customer return as of April 30.
Operating income increased 27% to $302.0 million largely on lower selling and administration costs and also includes estimated recovery of insurance related peanut butter product recall.
Free cash flow increased to $220.7 million compared to $183.0 million a year ago.
Segment Results
U.S. pet food sales in the quarter increased 6% to $718.1 million and segment profit margin improved 180 basis points to 16.8% and segment profit increased 19% to $120.7 million.
U.S. coffee sales, including brands Folgers, Dunkin, and Cafe Bustelo, increased 11% to $647.2 million and 440 basis points to 25.4% segment profit decreased 5% to $164.2 million.
U.S. consumer food products sales, including jams, jellies, and peanut butter, declined 5% to $397.2 million and segment profit margin improved 130 basis points to 23.9% and segment profit was nearly flat at $95.0 million.
International sales increased 12% to $271.2 million, segment profit rose 18% to $34.5 million, and segment profit margin improved 70 basis points to 12.7%.
Full-Year Results
For the full-year net sales were flat at $8 billion and net income decreased to $631.7 million or $5.83 per share from $878.3 million or $7.79 a share a year ago.
For the year, the company dividend increased 10% to $3.96 from $3.60 a year ago.
Through stock repurchases and dividends, the company returned $369.7 million in the quarter and $688.5 million in the full year.
The company repurchased 2.0 million common shares for $262.7 million in the fourth quarter.
Guidance and Outlook
The food products maker guided full-year fiscal 2023 sales to increase between 3.5% and 4.5%, capital expense of $550 million, and free cash flow of $500 million.
The company sales growth estimate includes 2% unfavorable impact related to manufacturing downtime and customer returns linked to Jif peanut butter product recall.
Company and Stock
J.M. Smucker makes pet food, coffee, jams, and jellies and peanut butter.
J.M. Smucker Company jumped 4.5% to $128.80 after the food products maker reported higher-than-expected quarterly results.
J.M. Smucker stock has declined 4.5% so far this year.
Movers: G III, Gitlab, JM Smucker, Kohl's, Mosaic, Target, United Natural
Barry Adams
07 Jun, 2022
New York City
Buzzfeed Inc surged 10.8% to $2.47 after plunging 41% in the previous session following the post-IPO lockup period expiration.
The company guided fiscal 2023 sales to increase between 3.5% and 4.5% and adjusted earnings per share between $7.85 and $8.25.
GIII Apparel Group, Ltd was nearly unchanged at $27.36 after the company reported net sales in the fiscal 2023 first quarter ending in April increased 32.5% to $688.8 million and net income soared 16.3% to $30.6 million.
Diluted earnings per share increased to 62 cents from 53 cents a year ago.
For fiscal 2023, the company expects net sales of approximately $3.24 billion and net income between $205.0 million and $215.0 million, or between $4.23 and $4.33 a diluted share.
Gitlab Inc soared 22.5% to $48.81 after the cloud database company reported better-than-expected quarterly results.
Net sales in fiscal first quarter 2023 ending in April increased 75% to $87.4 million and net income declined to $26.1 million or 18 cents a share from $27.9 million or 53 cents a share.
For the second quarter the company guided between $93.5 million and $94.5 million and for fiscal 2023 between $398.0 million and $402.0 million.
J.M. Smucker Company jumped 4.5% to $128.80 after the food products maker reported higher-than-expected quarterly results.
Fiscal 2022 fourth quarter ending in April sales increased 6% to $2.03 billion and net income increased 37% to $202.1 million.
Diluted earnings per share increased to $1.88 from $1.35 a year ago.
Kohl's Corporation jumped 7.4% to $44.97 after the company said it is in advanced and exclusive talks with Franchise Group, the parent of Vitamin Shopee. The deal values the company at $60 a share or $8 billion.
Franchise Group jumped 7.7% to $39.83 and owns several brands including Sylvan Learning and Badcock Furniture.
Mosaic Co dropped 5.01% to $56.55 after a news report indicated that Brazilian ports are overflowing with fertilizers suggesting a near-term price decline.
Peloton Interactive Inc declined 1% to $12.34 after the company announced the departure of Chief Financial Office Jill Woodworth.
Liz Coddington, former executive at Amazon and Netflix, will replace Woodworth on June 13.
Target Inc dropped 7.2% to $148.20 after the diversified retailer announced a plan to lower inventories of unwanted products, cancel orders, and markdown excess products.
The company had warned its inventories problems during the release of latest quarter earnings.
The swift action to deal with inventories will come at the expense of earnings and operating margins.
The retailer lowered its operating margin estimate to 2%, lower than the previous estimate of 5.3%, and estimated a second-half operating margin of 6%.
United Natural Foods dropped 6.8% to $41.80 and the food distributor reported net sales in the fiscal 2022 third quarter ending in April rose 9.2% to $7.2 billion.
Net income surged 39.6% to $67 million or $1.10 a share.
The company lifted its full-year sales outlook to a new range between $28.8 billion and $29.1 billion, an increase of 7% on the midpoint basis from a year ago and earnings per share between $3.75 and $4.00, an increase of 56% on a midpoint from a year ago.
Stocks Waver After Target Cites Inventory Challenges
Barry Adams
07 Jun, 2022
New York City
Stocks were under pressure after Target issued an earnings alert highlighting inventory challenges.
Futures of the S&P 500 index declined 0.9% to 4,082.50 and the Nasdaq Composite index dropped 1.3% to 12,449.05.
Target Inc dropped 7.2% to $148.20 after the diversified retailer announced a plan to lower inventories of unwanted products, cancel orders, and markdown excess products.
The company had warned its inventories problems during the release of latest quarter earnings.
The swift action to deal with inventories will come at the expense of earnings and operating margins.
The retailer lowered its operating margin estimate to 2%, lower than the previous estimate of 5.3%, and estimated a second-half operating margin of 6%.
The company reiterated full-year revenue increase in the low- to mid-single digit and expects to maintain or gain market share in 2022.
After the Target announcement, Walmart Inc dropped 2.8% to $124.87.
Stocks generally closed higher on Monday in a muted trading in the absence of economic news and light earnings calendar.
Investors are still confronting rising energy prices and elevated inflation pressures and assessing the health of the U.S. economy and consumers.
Investors are looking ahead to consumer price index data on Friday and hoping that the inflationary pressures would recede and provide support for market advance.
In Europe, market indexes turned lower after German factory orders declined for the third month in a row in April.
The German statistics office said orders fell 2.7% from March and plunged 6.2% from a year ago on weak foreign demand and harsh China lockdown measures.
A separate report from the German Machinery Industry Trade Association said machinery orders declined 7% in April from a year ago on slower growth demand from China, supply chain disruptions, and the Ukraine war.
The orders declined for the second month in a row and domestic orders plunged 17% and orders from foreign markets fell 2%.
The DAX index declined 1.1% to 14,489.27, the CAC-40 dropped 1.1% to 6,478.20, and the FTSE 100 index fell 0.4% to 7,581.65.
The U.K. Prime Minister Boris Johnson survived a no-confidence vote after 211 members of parliament of Conservative Party expressed confidence in his premiership.
Prime Minister Johnson led the party to its largest victory in many decades but with multiple scandals voters discontent is rising and several members of his party are looking for a leadership change.
U.S. Stocks Climb, Bond Yields Stay Above 3%
Barry Adams
06 Jun, 2022
New York City
U.S stocks retained a positive bias after a week of losses but struggled in the afternoon trading after bond yields stayed above 3%.
The yield on the 10-year Treasury note increased to 3.038%.
The S&P 500 index jumped 0.3% to 4,121.45 and the Nasdaq Composite index advanced 0.4% to 12,061.73.
Stocks gained after the Department of Commerce announced a pause on tariffs on solar power products imported from four countries for the next 24 months.
Tariffs will be paused on solar panel modules and chips imported from Cambodia, Malaysia, Thailand, and Vietnam but existing duties on solar products from China and Taiwan will remain in effect, according to a statement from the Commerce Department.
The Commerce Department added it will continue its investigation whether Chinese makers are circumventing U.S. duties by funning products through these neighboring countries.
China loosened mobility and gathering restrictions after the coronavirus spread subsided.
Crude oil inched lower 65 cents to $118.22 a barrel and international trading Brent crude crossed above $121.50 a barrel.
Saudi Arabia announced a $2.10 a barrel increase to base price for the shipment of its leading Arab light crude to Asia and increased premium to $6.50 a barrel.
The price increase came only a week after a meeting of OPEC+ nations agreed to roll forward a three month increase in supply to two months totaling 648,000 barrel a day.
Investors also looked ahead to the European Central Bank's policy meeting on Wednesday that may offer more clarity on the rate decision on July 21.
Investors are battling multiple global shocks not seen in a century.
Economies around the world are impacted by once a century pandemic, war in Europe after 75 years, and global food and fuel price surge lifting the inflation to a 4-decade high.
In addition, central banks in Europe and the U.S. are set to lift rates after fifteen years or near zero rates or negative rates.
Stocks reacted to company specific news.
Spirit Airlines jumped 5.7% to $20.74 after JetBlue sweetened its bid to $31.50 a share and proposed to increase breakup fee to $350 million.
Didi Global surged on news that Chinese authorities are concluding investigations of the company and the ride-hailing company will be permitted to add new users.
The news was first reported by the Wall Street Journal.
Apple Inc jumped 1.6% to $146.90 and the company is set to kick-off its annual Worldwide Developers Conference today.
Apple announced a new MacBook, MacBook Pro, M2 Chip
ON Semiconductor jumped 6.1% to $62.94, VICI Properties gained 6.4% to $31.39, Keurig Dr Pepper advanced 5.9% to $34.93 after three companies were selected to be included in the popular S&P 500 index.
Under Armour declined 0.8% to $10.08 after the company's stock was dropped from the S&P 500 index.
European markets traded higher after the U.S. proposed to roll-back tariffs on China products.
The DAX index gained 1.4% to 14,655.95, the CAC-40 index rose 1.35% to 6,573.11, and the FTSE 100 index added 1.3% to 7,629.77.
Asian markets advanced after China eased mobility restrictions as life returns to normal after two months of severe lockdowns to halt the spreading of coronavirus.
The Nikkei index jumped 0.5% to 27,915.89, the Hang Seng Index soared 2.7% to 21,653.90, and the Sensex index edged down 0.2%.
The Reserve Bank of India is set to lift its rate tomorrow by 50 basis points after inflation indexes jumped to eight-year highs.
The ASX 200 Index dropped 0.5% to 7,206.30 and the broader All Ordinaries Index fell 0.5% lower to 7,433.10.
The Reserve Bank of Australia is also set to lift its benchmark interest rate between 25 and 40 basis points.
European Indexes Finish Higher In Active Trading
Barry Adams
06 Jun, 2022
New York City
European markets traded higher after the U.S. paused tariffs on solar power modules and cells from four countries.
Monetary policy committee members are scheduled to meet on Thursday June 9 ahead of the rate setting meeting on July 21.
The DAX index gained 1.4% to 14,655.95, the CAC-40 index rose 1.35% to 6,573.11, and the FTSE 100 index added 1.3% to 7,629.77.
The indexes in Frankfurt, Paris, and London opened higher and stayed i the positive zone all day on the optimism of increased activities in China.
Market indexes in Austria, the Netherlands, Portugal, Spain and Turkey also closed higher but indexes in Russia, Norway, and Iceland closed down.
Investors stepped up buying in London after a four-day weekend.
Fresnillo, the Mexico-based silver miner jumped 2.7% to 787.23 pence and Persimmon plc, the home builder gained 2.5% to 2,239.00 pence.
Royal Mail PLC jumped 4.0% to 321,25 pence and the mail service provider is embroiled in a pay dispute with workers union.
Royal Mail has declined 47.91% in the last 52 weeks of trading.
The U.K. passenger vehicle registration in May declined 20.6% to 124,394 after manufacturers struggled with chip shortages and supply chain disruptions.
The automobile registrations were the second weakest May since 1992, according to the data released by the Society of Motor Manufacturers and Traders.
In Paris trading large cap companies and commodities makers led the gainers.
ArcelorMittal gained 1.5% to 30.81 euros, Publicis Groupe SA jumped 1.7% to 51.90 euros, and Accor SA jumped 1.8% to 30.64 euros.
In Frankfurt trading financial and insurance companies led the gainers.
Hellofresh SE jumped 6.7% to 36.57 euros, Allianz gained 1.6% to 198.30 euros, and Munich Re advanced 1.03% to 226.0 euros.
Mercedes Benz Group AG increased 1.2% to 68.0 euros.
Asian markets advanced after China eased mobility restrictions as life returns to normal after two months of severe lockdowns to halt the spreading of coronavirus.
The Nikkei index jumped 0.5% to 27,915.89, the Hang Seng Index soared 2.7% to 21,653.90, and the Sensex index edged down 0.2%.
The Reserve Bank of India is set to lift its rate tomorrow by 50 basis points after inflation indexes jumped to eight-year highs.
The ASX 200 Index dropped 0.5% to 7,206.30 and the broader All Ordinaries Index fell 0.5% lower to 7,433.10.
The Reserve Bank of Australia is also set to lift its benchmark interest rate between 25 and 40 basis points.
JetBlue Sweetens Spirit Offer
Scott Peters
06 Jun, 2022
New York City
JetBlue sweetened its offer to acquire Spirit Airlines and convince shareholders to walk away from the merger with Frontier Group.
JetBlue in a regulatory filing said it will offer to pay a breakup fee of $350 million in the event the airline fails to win antitrust regulatory approval.
The airline also proposed to pre-pay a portion of the fee as a cash dividend of $1.50 a share in advance of the completion of the deal, if shareholders agree to vote in favor of a merger with JetBlue.
With the new revised terms, the proposed merger offer will be $30 and $1.50 in dividend totaling $31.50 a share in cash.
Previously Spirit board had rejected the JetBlue offer on the grounds that the deal may face regulatory approval headwinds.
Solar Power Stocks Jump On Tariffs Pause
Barry Adams
06 Jun, 2022
New York City
Apple Inc jumped 1.6% to $146.90 and the company is set to kick-off its annual Worldwide Developers Conference today.
Didi Global surged on news that Chinese authorities are concluding investigations of the company and the ride-hailing company will be permitted to add new users.
The news was first reported by the Wall Street Journal.
ON Semiconductor jumped 6.1% to $62.94, VICI Properties gained 6.4% to $31.39, Keurig Dr Pepper advanced 5.9% to $34.93 after three companies were selected to be included in the popular S&P 500 index.
Under Armour declined 0.8% to $10.08 after the company's stock was dropped from the S&P 500 index.
Spirit Airlines jumped 5.7% to $20.74 after JetBlue sweetened its bid to $31.50 a share and proposed to increase breakup fee to $350 million.
Solar stocks surged on a report that the President Biden's administration will suspend tariffs on solar panel components for 24 months from Cambodia, Malaysia, Thailand, and Vietnam.
The U.S. paused tariffs after a Commerce Department month-long investigation had held up imports on the worries that Chinese companies may have been transshipping products from these countries.
Sunrun Inc soared 10.5% to $29.55, SunPower Corporation jumped 6.4% to $19.52, and Array Technologies advanced 14.5% to $13.71.
"Existing duties on Chinese and Taiwanese imports of solar cells and modules remain in effect,
U.S. Stocks Advance On China Optimism, JetBlue Sweetens Spirit Bid
Barry Adams
06 Jun, 2022
New York City
U.S. stocks trade higher in morning after a week of moderate losses and crude oil jumped after Saudi Arabia lifts oil prices.
The S&P 500 index jumped 1.1% to 4,155.35 and the Nasdaq Composite index advanced 1.6% to 12,751.00.
The yield on 10-year Treasury notes inched higher to 2.972%.
Crude oil jumped 15 cents to $119.30 a barrel and narrowed the spread with the Brent crude oil trading at $119.95.
In the morning rebound, stocks gained on hopes that the President Biden's administration's plan to rollback tariffs on imports from China may ease pressures on inflation.
China loosened mobility and gathering restrictions after the coronavirus spread subsided.
Investors also looked ahead to the European Central Bank's policy meeting on Wednesday that may offer more clarity on the rate decision on July 21.
Investors are battling multiple global shocks not seen in a century.
Economies around the world are impacted by once a century pandemic, war in Europe after 75 years, and global food and fuel price surge lifting the inflation to a 4-decade high.
In addition, central banks in Europe and the U.S. are set to lift rates after fifteen years or near zero rates or negative rates.
In premarket trading following stocks reacted to the latest news.
Spirit Airlines jumped 5.7% to $20.74 after JetBlue sweetened its bid to $31.50 a share and proposed to increase breakup fee to $350 million.
Didi Global surged on news that Chinese authorities are concluding investigations of the company and the ride-hailing company will be permitted to add new users.
The news was first reported by the Wall Street Journal.
Apple Inc jumped 1.6% to $146.90 and the company is set to kick-off its annual Worldwide Developers Conference today.
ON Semiconductor jumped 6.1% to $62.94, VICI Properties gained 6.4% to $31.39, Keurig Dr Pepper advanced 5.9% to $34.93 after three companies were selected to be included in the popular S&P 500 index.
Under Armour declined 0.8% to $10.08 after the company's stock was dropped from the S&P 500 index.
European markets traded higher after the U.S. proposed to roll-back tariffs on China products.
The DAX index gained 1.4% to 14,655.95, the CAC-40 index rose 1.35% to 6,573.11, and the FTSE 100 index added 1.3% to 7,629.77.
Asian markets advanced after China eased mobility restrictions as life returns to normal after two months of severe lockdowns to halt the spreading of coronavirus.
The Nikkei index jumped 0.5% to 27,915.89, the Hang Seng Index soared 2.7% to 21,653.90, and the Sensex index edged down 0.2%.
The Reserve Bank of India is set to lift its rate tomorrow by 50 basis points after inflation indexes jumped to eight-year highs.
The ASX 200 Index dropped 0.5% to 7,206.30 and the broader All Ordinaries Index fell 0.5% lower to 7,433.10.
The Reserve Bank of Australia is also set to lift its benchmark interest rate between 25 and 40 basis points.
Weekly Losses in U.S. Indexes as Rapid Jobs Recovery Begins to Cool
Barry Adams
03 Jun, 2022
New York City
U.S. investors turned cautious after the latest jobs reports showed tight labor market conditions and rising wages.
The S&P 500 index dropped 1.7% to 4,108.51 and the Nasdaq Composite declined 2.7% to 12,012.73.
For the week, the S&P 500 index declined 1.2% and the Nasdaq dropped 1%.
Stocks were on the defensive after employers added 390,00 net new jobs in May and inched ever closer to the employment levels seen in 2019.
Rate increase worry was front and center and the yield on 10-year Treasury notes jumped to 2.955%.
Futures of crude oil gained $3.32 to $120.19 and rose to a new 8-year high after traders bet that the expanded job market will sustain higher demand for petroleum products.
The good news on the labor front was seen as a bad news for investors because expanding labor markets are likely to stoke aggregate demand even higher, precisely what the Fed is trying to cool with higher rates.
The Fed has advertised two rate increases in as many months starting June impacting valuations of tech and growth stocks where larger earnings are in future.
The tech-heavy Nasdaq dropped nearly 3% on the worries that the sustained and aggressive rate increase may be the only way policymakers will be able to kill the aggregate demand in the economy increasing the recessionary risks.
Investors reacted strongly to negative news and generally ignored positive news today.
Tesla dropped as much as 10% after the electric vehicle maker's CEO in an internal memo to employees announced a hiring freeze and a plan to trim 10% staff.
lululemon declined 1% despite the retailer reported a 32% increase in sales in the latest quarter and a jump in earnings.
The premium sports apparel maker lifted annual revenues outlook on sustained demand for its high-priced products.
In Europe, indexes turned lower following the weakness on Wall Street.
The DAX index declined 0.2% to 14,460.09 and the CAC-40 index dropped 0.23% to 6,485.30, and markets in the U.K. were closed.
In Asia, the Nikkei 225 rose 1.3% to 27,761.57, Hang Seng Index declined 1% to 21,082.13, and the Sensex index edged down 0.09% to 55,769.23.
Lululemon Lifts Guidance, Premium Prices Do Not Deter Customers
Scott Peters
03 Jun, 2022
New York City
Lululemon Athletica reported rising sales and income as affluent buyers kept buying premium products even after the end of pandemic restrictions.
The premium sportswear retailer said first quarter revenues increased 32% to $1.6 billion on 24% comparable store sales.
The sales performance confirmed the trend reported by other high end retailers including Nordstrom, Levi Strauss, and Bloomingdale unit owned by Macy's.
Lululemon benefitted during the pandemic as many Americans were forced to stay home and sought for comfortable clothing.
However, the demand for company's products continue to be strong despite most workers returning to office work and engage in other social activities.
The premium apparel retailer said when compared on a three-year basis, first quarter revenues jumped 106% representing a compounded annual growth rate of 27%.
Net income increased to $189.99 million or $1.48 a share compared to $144.9 million or $1.11 a share.
Gross margin in the quarter declined to 53.9% from 57.1% and operating margin eased to 15.8% from 16.1% a year ago.
Net revenues in North America increased 32% and in international segments rose 29%.
Retail stores and online sales continued to attract new customers driving higher comparable store sales to 24% and direct sales to 32% in the quarter.
Total comparable sales jumped 28% and grew 29% in constant currency.
Direct sales increased to 45% of total sales from 44% a year ago.
In the quarter, the company added 5 net new stores totaling store count to 579.
Inventories at the end of the quarter surged 74% to $1.3 billion and rose 56% on a unit basis to mitigate supply chain disruptions.
Stock Repurchase plan
The Company repurchased 0.7 million shares of its own common stock at an average price of $328.40 per share for a total cost of $232.6 million.
Guidance and Outlook
The company guided second quarter 2022 revenues between $1.750 billion and $1.775 billion and diluted earnings per share between $1.89 and $1.94.
Diluted earnings per share are expected between $1.89 to $1.94 in the second quarter, excluding the gain on the sale of an administrative office building, adjusted diluted earnings per share are expected to be in the range of $1.82 to $1.87.
The retailer also revised full-year 2022 revenues higher to a range between $7.61 billion and $7.71 billion from the previous estimate between $7.49 billion and $7.62 billion.
Diluted earnings per share are expected to be in the range of $9.42 to $9.57 for the full-year, and excluding the gain on the sale of an administrative office building, adjusted diluted earnings per share are expected between $9.35 to $9.50.
Company and Stock
Lululemon Inc operates 579 stores worldwide including 71 stores in China and sells athletic apparel, footwear, and accessories for yoga, running, and other activities.
After the release of earnings in premarket trading, Lululemon added 0.5% to $304.02 and in the year-so-far has fallen 22.4%.
Tech Stocks Drop 2% After Strong Jobs Report
Barry Adams
03 Jun, 2022
New York City
U.S. stocks fell sharply after the latest jobs report showed economic strength and provided one more reason to raise rates.
The S&P 500 index declined 1.7% to 4,106.76 and the Nasdaq Composite index fell 2.5% to 12,005,34.
Non-farm businesses added 390,000 net new jobs, sharply higher than 325,000 expected by most economists, data from the Bureau of Labor Statistics showed today.
The pace of job additions was the slowest since April 2021 but faster than anticipated by many economists.
Investors feared that the job market strength will factor in Fed's decision to lift rates higher and faster.
The Federal Reserve is set to lift rates 50 basis points in June and July.
Bod market took a note of the job market strength and the yield on 10-year Treasury notes increased to 2.966%.
Futures of crude oil increased $1.75 to $118.64 and natural gas added 8 cents to $8.56 a unit.
Investors fear higher rates may slow the fragile economy faster than expected and discount future earnings more making growth and tech stocks less attractive.
The fears of rising rates have already contracted tech stock valuations on the basis of earnings between 20% and 30% in the last two months and tech-heavy Nasdaq Composite has declined 24.2% in the year-so-far.
Tech stocks led the decliners again today and Microsoft fell 1.8% to $269.52.
Tesla Inc dropped 8.5% to $709.28 after CEO Elon Musk in an internal memo announced a hiring freeze and 10% job cuts at the electric automaker.
Nividia dropped 3.8% to $188.34 and Micron Technology plunged 6.7% to $70.29.
Apple Inc declined 3.7% to $145.72 after Morgan Stanley in a research note cautioned slowing App store sales may impact short term outlook for the company.
Joann Inc plunge 19.8% to $6.39 after the specialty retailer reported quarterly loss of of $35.1 million or 86 cents a share compared to profit of $15.1 million or 38 cents a year ago.
Revenues fell short of expectations to $498 million, a 13% decline from a year ago.
Both Nasdaq Composite and S&P 500 indexes are down 1% in the holiday-shortened week.