Retailers, Techs and Home Builders Decline

123jump.com Staff
20 May, 2008
New York City

U.S. stocks turned lower after April wholesale inflation rose. The rise in inflation put investors on the defensive. Crude oil price surged above $129 a barrel after comments from oil complex investor T Boone Pickens. His comments suggested that the crude oil price may reach higher than $150 a barrel. European markets closed sharply lower led by 2.4% fall in the UK and Sweden. Brazil and Mexico trade lower.

[R]1:30PM New York – U.S. stocks turned lower after wholesale inflation rose and earnings from Home Depot, Saks and Target were lower than a year ago.[/R]

U.S. stocks turned lower after April wholesale inflation rose, Home Depot reported lower earnings and crude oil jumped above $129 a barrel.

Index of inflation is showing a marked rise in prices across various items and expectations of higher inflations are now becoming more prevalent. Consumers are reeling from higher prices of crude oil, natural gas, food products and durable items.

In April, the index for finished goods other than foods and energy what is called core rate of wholesale inflation moved up 0.4% and was partially offset by prices for energy goods, which fell 0.2%. The index for finished consumer foods was unchanged from its March level.

Producers Price Index in April rose 0.2% after 1.1% rise in March and revised 0.3% gain in February. Prices of vegetable and other food items dropped 5.4% in April after surging in March nearly 15% but milk products rose 2.9%. Prices of steel and other ferrous metal products rose 6.2%. What has been familiar to consumers for months now, prices of goods shoot up and then come down slowly and stabilize at a higher rate.

Stocks turned lower after the release of the inflation data. Dow Jones Index fell 181 to 12,846, Nasdaq declined 21 to 2,494 and S&P 500 fell 11 to 1,484.

European markets closed lower on the worries that the U.S. inflicted credit market malaise is likely to cause more losses at European banks. A sharp rise in crude oil price caused worries about global inflation. UK led the region with a loss of 2.9% followed by losses in Stockholm of 2.4%, in Switzerland of 1.9%, and in Germany, France and Spain of 1.4%.

Earnings review

AutoZone, Inc, a specialty retailer of automotive replacement parts and accessories reported third quarter sales rose 3.0% to $1.5 billion from $1.4 billion a year ago. Net income in the quarter increased 4.6% to $158.6 million or $2.49 per diluted share compared to net income of $151.5 million or $2.17 per share, a year ago.

AutoZone, Inc stock ((AZO)) fell 74 cents to $127.06.

The Home Depot, Inc, the largest home improvement retailer reported first quarter sales decreased 3.4% to $17.9 billion from $18.5 billion a year ago. Net income in the quarter dropped 66% to $356 million or 21 cents per diluted share compared to net income of $1.05 billion or 53 cents per share, a year ago.

The Home Depot, Inc stock ((HD)) $1.62 to $27.25.

Medtronic, Inc, a medical device maker reported fourth quarter revenues rose 18% to $3.8 billion from $3.2 billion a year ago. Net income in the quarter was $812 million or 72 cents per diluted share compared to net income of $812 million or 70 cents per share, a year ago.

Medtronic stock ((MDT)) added $1.11 to $48.99.

Saks Incorporated operator of Saks Fifth Avenue department stores reported third quarter sales rose 100% to $862.4 million from $792.7 million a year ago. Net income in the quarter increased 2.1% to $18.3 million or 13 cents per diluted share compared to net income of $11.0 million or 7 cents per share, a year ago.

Saks Incorporated stock ((SKS)) fell $1.09 to $13.04.

Staples, Inc, the world''s largest office products supplier reported first quarter sales rose 6% to $4.88 billion from $4.59 billion a year ago. Net income in the quarter increased 1.5% to $212.3 million or 30 cents per diluted share compared to net income of $209.1 million or 29 cents per share, a year ago.

Staples, Inc ((SPLS)) stock added 10 cents to $23.67.

Target Corporation discount retailer reported first quarter revenues rose 5% to $14.80 billion from $14.04 billion a year ago. Net income in the quarter fell 8% to $602 million or 74 cents per diluted share compared to net income of $651 million or 75 cents per share, a year ago.

Target Corporation stock ((TGT)) dropped 46 cents $54.46.