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Wall Street Stocks Extend Gains On Weaker Inflation Hopes

Barry Adams
12 Sep, 2022
New York City

Stocks advanced on Wall Street on the hopes that the consumer inflation has peaked and economic slowdown may be not as deep as earlier estimated.

Investors are awaiting the inflation report on Tuesday and retail sales and industrial production data on Thursday, last two major economic reports ahead of the rate setting committee's meeting later in the month.

The S&P 500 index increased 1.1% to 4,112.77 and the Nasdaq Composite added 1.2% to 12,259.92.

With earnings season nearly coming to an end, investors are focused on the possible earnings revisions for the third quarter.

Energy prices rose after the dollar index declined following the largest rate hike in two decades in the eurozone.

Crude oil futures increased $1.61 to $88.40 a barrel and natural gas added 25 cents to $8.25 a thermal unit.

The yield on 12-year Treasury notes declined to 3.54%, 10-year notes edged down to 3.29%, and 30-year bond fell to 3.44%.

European Markets Pull Ahead, Euro Gains

European markets advanced after investors looked beyond the deepening energy crisis and the hawkish tone of policymakers.

Resource stocks gained after the dollar weakness lifted the euro and energy prices.

The euro resumed its advance after the European Central Bank lifted its key lending rate by 75 basis points last week.

The DAX index jumped 2.5% to 13,419.60, the CAC-40 index 2.1% to 6,342.43, and the FTSE 100 index jumped 1.7% to 7,474.24.

The euro inched higher to a 3-week high to $1.01 and the British pound edged up to $1.17.

The British economy expanded 0.2% in July from June after falling 0.6% in the previous month, the Office for National Statistics said Monday.

Service sector led the expansion with a growth of 0.4% offset by the 0.3% decline in production and 0.8% decline in construction.

Monthly GDP is 1.1% above its pre-coronavirus level in February 2020.

GDP was flat in the three months to July compared with the previous three months.

Industrial production in Italy gained 0.4% in July from the downwardly revised 2% decline in the previous month, National Institute of Statistics said Monday.

On a seasonally adjusted and annual basis, production increased 1.4% after falling 1.1% in June.

High-priced Furniture Retailer RH Guides Larger Sales Decline

Scott Peters
09 Sep, 2022
New York City

RH Inc added 4.3% to $273.35 after the high-priced furniture retailer said third quarter sales are expected to decline more-than-expected.

Revenue in the fiscal second quarter edged up to $992 million from $989 million a year ago and rose 40% on a two-year basis from $709 million.

The launch of RH Contemporary, the openings of RH San Francisco and RH Guesthouse, the development of RH International, and the rollout of RH In-Your-Home which led to approximately 400 of the 530 basis points increase in SG&A expense in the quarter.

Selling and General Administration expense rose to 29% from 24% a year ago.

The retailer is pivoting to a portfolio of high-price hotels like the one recently opened in New York City with room rates starting at $3,500 a night.

Net income in the quarter fell to $122 million from $227 million a year ago and diluted earnings per share declined to $5.37 from $7.09.

Outlook

The furniture retailer guided third quarter revenue to decline in the range of 15% to 18% and adjusted operating margin between 18.5% and 19.0%.

For the full-year revenue is expected to fall between 3.5% and 5.5% with adjusted operating margin between 21.0% and 21.5%.

Buybacks

RH repurchased one million shares of its common stock in the second quarter at an average price of $255 a share.

The company also spent $82 million in cash to repurchase $18 million and $39 million of the 2023 and 2024 outstanding convertible notes in privately negotiated transactions.

Following these transactions, $44 million of convertible notes are outstanding as of July 30, 2022.

Hooker Quarterly Sales and Income Struggle

Scott Peters
09 Sep, 2022
New York City

Hooker Furnishing Corp rose 2.1% to $15.08 after the company said Asian factories resumed their normal production schedules and inventories flows improved on higher shipments from Asia.

Revenues in fiscal second quarter ending in July fell 5.9% to $152.9 million.

Consolidated net income for the quarter was $5.5 million or 46 cents a diluted share compared to $7.5 million or 62 cents a year ago.

The Hooker Branded segment

Casey's General Quarterly Net Jumps 28%

Scott Peters
09 Sep, 2022
New York City

Casey's General Stores Inc added 0.3% to $220.43 after the convenience chain operator said comparable same store sales increased 6.3%.

Revenue in the fiscal first quarter ending in July increased to $4.5 billion from $3.2 billion a year ago.

Total gallons increased 3.3% from a year ago due to the store count increase while same-store gallons sold fell 2.3%, as volumes were impacted by high retail fuel prices.

Fuel margin increased to 44.7 cents a gallon from 35.1 cents and fuel sales generated gross profit of $308 million compared to $234.4 million a year ago.

Net income in the quarter increased to $152.9 million from $119.2 million and diluted earnings per share rose to $4.09 from $3.19 a year ago.

Dividends and Buybacks

In August the company announced to pay a quarterly dividend of 38 cents a share payable November 15, 2022 to shareholders of record on November 1, 2022.

The company did not make any stock repurchase in the quarter and has $400 million remaining under its existing share repurchase plan.

Fiscal 2023 Outlook

The company reiterated its previously announced outlook.

The company expects same-store inside sales to increase 4% to 6% and maintain an inside margin of approximately 40%.

The company expects same-store fuel gallons to be flat to 2% higher.

Total operating expenses are expected to increase approximately 9% to 10%.

The company plans on opening 80 new stores and meet or exceed its previous estimate of opening 345 stores in three years.

The annual expense for property, plant and equipment is estimated to range between $450 million and $500 million, including one-time expense of $135 million for the recently acquired stores.

Global Markets Rally On Optimism

Barry Adams
09 Sep, 2022
New York City

Stocks on Wall Street advanced and extended weekly gains after falling for three weeks in a row.

Investors are still questioning the Fed's commitment in fighting sky-high inflation, and interest rates have lagged for nearly two years.

Inflation has been rising for 22 months in a row and hovering near 9% but interest rates are lagging significantly near 2%.

Moreover, the longer the Fed takes in taming inflation, longer the duration of high rates will be needed.

Over the last two weeks, the Federal Reserve Chair Jerome Powell's forcefully reiterated central bank's commitment in fighting high inflation has left many on Wall Street unconvinced.

In fact, the Fed is fighting on two fronts, inflation and credibility.

Despite the Fed's hawkish rhetoric, the central bank remains weak in its fight against high inflation and high prices are seeping rapidly deeper and wider in the economy.

Rising energy costs and food prices have spilled over in rapidly rising wages and forcing many small businesses on the brink of shut down.

The Federal Reserve has come under heavy criticism for waking up too late in recognizing high inflation and doing too little in taming 4-decade high rapid price increases.

The S&P 500 index gained 1.7% to 4,070.34 and the Nasdaq Composite index added 2.2% to 12,118,83.

For the week, the two popular indexes are up 3%.

Futures of crude oil increased $2.80 to $86.36 a barrel and natural gas rose 12 cents to $8.03 a thermal unit.

Oil prices rose after news that the U.S. President Biden's administration is not looking to release more oil from the U.S. Strategic Petroleum Reserve.

Oil traders also reviewed Russia's threat to divert energy exports from Europe to Asia after G7 finance ministers proposed a price cap.

The yield on 2-year Treasury notes eased to 3.56%, 10-year Treasury notes declined 3.33% and 30-year bonds edged down to 3.46%.

European Markets Rally Despite Weak Economic Conditions

Benchmark indexes in Europe extended weekly gains after rising for the second day in a row as investors looked beyond the latest rate hike and the ongoing economic slowdown.

Trading in energy markets dominated market sentiment for stocks as European governments consider intervening in energy prices.

Natural gas prices dropped 6% and extended weekly decline to 5% and the European Union energy committee is considering temporarily suspending power derivatives and implementing price caps.

Brent crude oil fell for the second week in a row after the European Central Bank's aggressive rate hike and widening activity restrictions in China, the largest importer of the commodity.

Brent crude oil traded above $92 a barrel and fell 1% in the week, the second weekly decline in a row, but rebounded from the 7-month low of $87.30.

The DAX index added 1.4% to 13,088.21, the CAC-40 index increased 1.4% to 6,212.33, and the FTSE 100 index advanced 1.2% to 7,351.07.

The benchmark SMI ended with a gain of 109.92 points or 1.02% at 10,900.24.

The DAX and the CAC-40 gained more than 3%, the SMI increased 1.5% and the FTSE 100 added 1% for the week.

The euro jumped above the parity and traded at $1.004 and the British pound inched up to $1.16.

Industrial production in France declined for the first time in three months in July.

Industrial production fell 1.6% from June after rising 1.2% in the previous month, France's statistical agency Insee said Friday.

Consumer prices in Norway unexpectedly eased in August but wholesale prices continued to rise, Statistics Norway said Friday.

Consumer price inflation eased to 6.5% in August from 6.8% in July, driven by a 10.3% rise in food and non-alcoholic beverage prices.

In a separate report, the statistics agency said wholesale prices accelerated to 77.3% in August from 73.6% in July.

Tech Rally Lifts Asian Markets Higher

Asian markets advanced following the gains in U.S. and European markets in Thursday's trading.

China's consumer prices rose at a slower pace in August, the National Bureau of Statistics said Friday.

The inflation index rose 2.5% in August after rising 2.7% in July on an annual basis.

The unexpected slowdown in inflation lifted markets in Shanghai and in Hong Kong.

The Nikkei 225 index gained 0.5% to 28,214.75, the Hang Seng Index added 2.7% to 19,362.25, and the Sensex index increased 0.2% to 59,793.14.

For the week, the Nikkei added 2.2%, the Hang Seng 50 added 2.7 and the Shanghai index and the Sensex gained 1.7%.

The Australian index gained 0.7% in Friday's trading and gained 1% for the week following the sustained rise in commodities prices.

European Markets Advance In Search of Better Days Ahead

Bridgette Randall
09 Sep, 2022
Frankfurt

Benchmark indexes in Europe extended weekly gains after rising for the second day in a row as investors looked beyond the latest rate hike and the ongoing economic slowdown.

Trading in energy markets dominated market sentiment for stocks as European governments to begin to intervene in energy prices.