U.S. and European Markets Advance, Natural Gas Above $9

Barry Adams
16 Aug, 2022
New York City

U.S. stocks traded mixed after investors digested the latest batch of earnings and looked ahead to the release of the Fed's minutes of meetings on Wednesday.  

Retailers traded higher after better-than-expected quarterly results from Home Depot and Walmart, lifting hopes for other retail companies scheduled to release earnings during the week. 

Rising sales at Walmart and Home Depot suggested that despite the elevated inflation and retail gasoline prices consumer spending is still growing. 

Natural gas prices continued to advance after several regions in the U.S. continue to experience above average temperatures. 

Stocks struggled in the first two hours of trading following the weakness in tech and semiconductor stocks. 

The strength in the retail sector lifted benchmark indexes above the flat-line in volatile trading. 

Popular indexes dipped below the flat-line after 2: p.m. but managed to rebound near the close. 

The S&P 500 index increased 0.2% to 4,305.20 and the Nasdaq Composite index fell 0.2% to 13,102.55. 

Futures of crude oil declined $2.45 to $86.98 a barrel and natural gas increased 63 cents to $9.34 a thermal unit. 

The yield on 10-year U.S. Treasury notes increased 5 ticks to 2.81% and 2-year notes rose to 3.21%. 

Ally Financial increased 3.4% to $36.92 after the Berkshire Hathaway's latest 13-F regulatory filing showed that the company tripled its stake in the online bank in the second quarter.  

Bed Bath & Beyond soared nearly 70% and closed up 29% to $20..65 after the Reddit traders ramped up buying after the news that the GameStop chairman Ryan Cohen purchased 1.6 million call options with strike prices between $60 and $80 a share. 

Home Depot Inc added 5.7% to $332.56 after the home improvement retailer said second quarter sales rose 6.5% to $43.8 billion. 

Net income in the quarter rose to $5.2 billion or $5.05 a diluted share compared to $4.8 billion or $4.53 a diluted share a year ago. 

U.S. comparable sales increased 5.4% in the quarter and customer transactions declined 3% to 467.4 million but the average ticket size rose 9.1% to $90.02. 

The retailer reaffirmed its total and same store sales guidance for the fiscal year 2022 to 3.0% and diluted earnings per share to grow in mid-single digits percentage. 

ThredUp soared 16.4% to $3.59 after the online apparel resale platform operator said second quarter total revenues increased 27% to $76.4 million. 

Gross margin in the second quarter fell to 68.9% from 73.6% a year ago. 

Net loss in the quarter expanded to $28.4 million from $14.4 million a year ago. 

Active buyers increased 29% to 1.7 million and active orders soared 40% to 1.7 million in the second quarter. 

The retailer guided third quarter revenues between $64 million and $66 million and gross margin between 65% and 67%. 

Walmart Inc increased 6.2% to $140.81 after the retailer reported better-than-expected revenues and earnings in the second and also lowered its decline in annual earnings than previously expected.  

Total revenues in the second quarter increased 8.4% to $152.9 billion and net income rose 20.4% to $5.2 billion from $4.3 billion a year ago. 

Diluted earnings per share increased $1.88 from $1.52 a year ago. 

Comparable sales, excluding fuel, increased 6.5% at the U.S. Walmart location and surged 9.5% at Sam's Club.  

The retailer said full-year total sales are expected to rise 4.5% and the U.S. sales, excluding fuel, are estimated to increase 4% and in the second-half expand 3%. 

Ziprecruiter Inc dropped 7.3% to $19.45 after the online employment website operator said second quarter revenues increased 31% to $239.9 million. 

The company swung to net income of $13.1 million from a loss of $53.3 million a year ago. Diluted earnings per share were 11 cents compared to a loss of 55 cents. 

Ziprecuiter stock declined after the company said during the conference call with investors that the demand for employees began to soften towards the end of the quarter. 

 

European Markets Look Beyond Economic Data 

European markets traded higher in choppy trading and investors focused on corporate earnings and ignored the latest news on the economy. 

The indicator economic sentiment in the eurozone and Germany declined in August, according to the latest data released by the ZEW on Tuesday. 

The U.K. payrolls expanded i2.9% or 847,000 in July from a year ago and rose 0.2% or 73,000 from June, the ONS said Tuesday. 

The median monthly pay increased 6.6% from a year ago and rose 13.4% from February 2020 or just before the onset of the Covid-19 pandemic.

The employment data are preliminary and are expected to be revised.  

The latest data employment data indicated that the wage gains are significantly lagging the inflation and real wages are declining in the U.K. 

The DAX index increased 0.7% to 13,910.12, the CAC-40 index rose 0.4% to 6,592.58, and the FTSE 100 index advanced 0.4% to 7,536.06. 

Philips NV rose 2% to 19.89 euros after the Dutch company announced the CEO succession. 

Pandora AS declined 6.2% to 501.20 Danish Krone after the costume jewelry company said second quarter operating profit declined on higher costs. 

Revenues in the quarter increased 3% to 5.65 billion Danish Krone and operating profit declined to 1.25 billion from 1.3 billion Danish Krone. 

U.S. sales declined 1.2% in the quarter and China sales were impacted by the ongoing Covid-19 lockdowns affecting organic sales by 4 percentage points from 2021 and 7 percentage points from 2019. 

Net income in the period declined to 934 million from 992 million Danish Krone. 

The company retained its revenue growth outlook for the year between 4% and 6% and operating margin in the range of 25% and 25.5%. 

Ted Baker increased 17% to 108.80 pence after the fashion retailer agreed to an acquisition offer of 211 million pounds from the parent of Reebok, Juicy Couture, and David Beckham Authentic Brands Group. 

Delivery Hero SE increased 5.4% to 52.68 euros after the German-food delivery company reiterated its full-year outlook released in July. 

Mondi Group declined 2.2% to 1,636 pence after the packaging company agreed to acquire the Duino paper plant from Burgo Group of Italy for 40 million euros. 

BHP Group soared 5.3% to 2,349.74 after the mining giant reported record quarterly results in 11 years and said it plans to return a record amount of cash to shareholders. 

Net income in the fiscal year 2022 ending in June increased 173% to $30 billion and earnings per share shot up to $6.10 from $2.23 a year ago. 

The Anglo-American mining giant announced a final dividend of $1.75 a share or $8.9 billion, bringing total cash dividends for the full-year to a record $3.25 per share or 77% payout ratio. 

The annual profit included an exceptional after-tax gain of $7.1 billion reflects a net gain on merger of BHP