- Brian Turner
- 20 May, 2022
- New York City
China unexpectedly lowered its mortgage reference rate today hoping to revive the flagging housing market.
The People's Bank of China held its one-year loan prime rate at 3.7% but lowered its five-year loan, reference rate for mortgage lending, to 4.45% from 4.60%.
The rate cut was the largest since the rate structure was revised by the central bank in 2019 and was second after the rate was trimmed in January.
In January, the central bank lowered one-year and five-year rates after home prices and sales fell.
Home prices declined again in April compared to March.
The latest rate cut follows the central bank's lowering of the mortgage rate floor for the first-time home buyers over the weekend.
The central bank is looking to revive moribund housing market and spur more economic activities as the nation is struggling with Covid-19 stringent restrictions and lockdowns in many regions.
Stocks of builders changed little after the rate cut suggesting that the rate cut may not be enough but broader market indexes welcomed the move.
The Shanghai Composite Index gained 1.6% to 3,146.57 and the Hang Seng Index rose 3% to 20,717.24.
- Barry Adams
- 20 May, 2022
- New York City
U.S. indexes opened higher and stocks rebounded across all market caps and global sentiment improved after China took additional steps to revive housing demand.
Market indexes turned negative after one hour of trading on elevated oil prices and consumer health worries resurfaced.
The S&P 500 index decreased 0.3% to 3,889.35 and the Nasdaq Composite Index fell 0.3% to 11,349.52.
Unnerved investors have been struggling to gauge consumer health after several leading retailers reported falling earnings and sales and rising inventories.
The inventory mismatch across retailers has largely been blamed on supply chain challenges but it may show underlying weakness in consumers.
Consumers are battling rising energy, food and home prices and are trimming discretionary purchases.
Crude oil edged up 43 cents to $112.65 a barrel and has nearly doubled in the last 12 months from $63.30 a barrel and keep moving higher every week.
The elevated energy prices are expected to keep consumer price index higher in the months to come and shrink consumer discretionary spending.
The yield on 10-year Treasury notes edged slightly lower to 2.82%.
For the year, the Nasdaq is down 27% and the S&P 500 has fallen 19% as of market close yesterday.
Ross Stores plunged 21% after the retailer posted quarterly earnings and lowered its sales and earnings outlook.
Sales were below expectations in the last two months of the quarter, CEO Barbara Rentler said.
Foot Locker jumped 4% after the athletic footwear retailer reported better-than-expected adjusted earnings and comparable same store sales fell less than estimated by several analysts.
Deer & Company fell 7% after the heavy machinery maker despite the company reporting strong earnings and lifting annual sales outlook on rising global crop prices.
In Asian markets, the Nikkei jumped 1.3% and consumer price inflation in April rose 2.4%.
Indexes in China jumped between 1% and 3% after the People's Bank of China lowered the mortgage reference rate unexpectedly.
Market indexes in India jumped nearly 3% following the Asia-wide rally.
- Arjun Pandit
- 20 May, 2022
- New York City
Asian markets scaled higher after China unexpectedly lowered its mortgage reference rate hoping to revive the flagging housing market.
The People's Bank of China held its one-year loan prime rate at 3.7% but lowered its five-year loan, reference rate for mortgage lending, to 4.45% from 4.60%.
The rate was the largest since the rate structure was revised by the central bank in 2019 and was second after the rate was trimmed in January.
In January, the central bank lowered one-year and five-year rates after home prices and sales fell. Home prices declined again in April compared to March.
The latest rate cut follows the central bank's lowering of the mortgage rate floor for the first-time home buyers over the weekend.
The central bank is looking to revive moribund housing market and spur more economic activities as the nation is struggling with Covid-19 stringent restrictions and lockdowns in many regions.
Stocks of builders changed little after the rate cut suggesting that the rate cut is not likely to help much.
The Shanghai Composite Index gained 1.6% to 3,146.57 and the Hang Seng Index rose 3% to 20,717.24.
Consumer price index in Japan rose 2.4% in April from a year ago and edged up 0.4% from March, the Ministry of Internal Affairs and Communications said today.
Core prices excluding food and energy rose 2.1% from a year ago after rising at 0.8% in the previous month.
Consumer price inflation is ahead of the central bank's target rate of 2% for the first time in seven years, driven by 8-year high imported energy prices.
The Nikkei 225 index rose 1.3% to 26,739.0.
In trading, Seiko Epson rose 8.8% t0 2,123 yen after the company announced to buy back shares.
Isetan Mitsukoshi jumped 2.2% to 1,057 yen and Oriental Land Co advanced 2.3% to 18,345 yen on the hopes that the government is ready to relax restrictions on social and economic activities.
The Bank of Korea said producer prices in South Korea rose 9.2% in April after rising at 9.0% in March.
On a monthly basis the increase declined to 1.1% from 1.5% in the previous month.
The Kospi index climbed 1.81% to 2,639.29 ahead of the U.S. President Joe Biden's visit to South Korea.
In Australia stocks closed higher ahead of the federal election on Saturday with the Labor Party running ahead in polls but the lead has narrowed considerably in recent days.
Of the 17 million people expected to vote, six million have already cast their ballot in early voting.
The benchmark ASX 200 index rose 1.15% to 7,145.60 and closed up 1% for the week and first weekly gain in the last five weeks.
- Scott Peters
- 19 May, 2022
- New York City
Bath & Body Works Inc reported net sales decreased 1.3% to $1.45 billion in the first quarter ended April 30, 2022.
Net income in the quarter fell 43% to $154 million and diluted earnings per share declined to 64 cents from 97 cents a year ago.
Prior year's quarter included pre-tax loss of $105.5 million associated with early extinguishment of debt.
On an adjusted basis, which excludes the above charge in 2021, first quarter 2022 earnings from continuing operations per diluted share increased 7% to $0.64 compared to $0.60 last year, and net income from continuing operations was $154.9 million compared to $170.4 million last year.
Earnings per share increased because the number of outstanding shares declined to 243.3 million from 284.4 million a year ago.
The company opened 18 new stores in the quarter and total store count increased to 356.
Guidance and Outlook
The company guided second quarter earnings per share from continuing operations to fall between 60 and 65 cents compared to 77 cents a year ago.
For the full-year the retailer estimated earnings per share for continuing operations to fall between $3.80 and $4.15 compared to $4.51 a year ago and lowered from its previous guidance between $4.30 to $4.70.
Company and Stocks
Bath & Body Works operates 1,750 stores selling home fragrance and personal care products in the U.S. and Canada and franchises 350 stores at international locations.
Bath & Body Works stock declined 6.8% to $40.03 after the release of earnings and has declined 42.5% in the year so far.
- Brian Turner
- 19 May, 2022
- New York City
Existing home sales declined 2.4% in April, National Association of Realtors said today. Sales declined 5.9% from a year ago.
Home sales declined for the third month in a row to a seasonally adjusted rate of 5.61 million. Home price increase slowed to 14.8% with median price of $391,200.
"Higher home prices and sharply higher mortgage rates have reduced buyer activity," said Lawrence Yun, NAR's chief economist.
"It looks like more declines are imminent in the upcoming months, and we'll likely return to the pre-pandemic home sales activity after the remarkable surge over the past two years."
Despite the elevated prices and rising rates, homes remained on the market for only 17 days in April matching the days in March 2022 and April 2021.
Nearly 90% of all homes sold were on the market in less than a month.
All-cash sales accounted for 26% of transactions in April, down from 28% in March and up from the 25% recorded in April 2021.
Single family home sales in April declined to a seasonally adjusted annual rate of 4.99 million, a decline of 2.5% from March and 4.8% from a year ago.
The median existing single-family home price was $397,600 in April, up 14.8% from April 2021.
Existing home sales in the West fell 5.8% from the previous month and declined 8.1% from a year ago to an annual rate of 1.114 million and median home price increased 4.3% to $523,000.
Existing home sales in the South declined 4.6% in April from the previous month and fell 5.7% from a year ago to 2.49 million annual rate.
- Barry Adams
- 19 May, 2022
- New York City
Stocks after a day of roller coaster trading failed to close higher and dropped in the final thirty minutes of trading.
Fear dominated financial markets for the second day in a row and indexes lost ground as the S&P 500 teetered near bear territory in the early trading.
The indexes managed to rise above the flat-line four times but lacked support only to quickly dip in the negative.
The S&P 500 dropped 0.6% to 3,900.72 and the Nasdaq Composite decreased 0.3% to 11,388.51.
Crude oil jumped 2.7% $112.23 a barrel and the yield on 10-year U.S. Treasury notes decreased to 2.886%
The benchmark bond yields rose in seven of the last nine trading days and weekly jobless claims increased for the third week in a row.
Elevated crude prices drove the market sentiment and investors feared that persistent high energy prices will dampen economic activities and lower corporate earnings.
Investors sold stocks and feared that inflation is finally showing up in corporate results and more pain is likely to follow as the Fed prepares aggressive rate hikes that may tip the economy into a recession.
The twin fears of future faster rate hikes and sustained inflation have been playing out over the last eight weeks and reached a new height on Wednesday.
The earnings miss from Walmart and Target and cautious outlook from Lowe's fanned negative sentiment on Wednesday.
Cisco declined 14% after the networking systems maker reported flat quarterly sales and guided revenues to decline in the current quarter on the account of parts shortages and supply chain disruptions.
Kohl's dropped 7% after the general merchandise retailer reported a first quarter and comparable sales declined 5.2% and said adjusted earnings per share plunged 90% to 11 cents from $1.05 a year ago.
BJ's Wholesale Club bucked the retail sector trend and rose 8% after the company reported latest quarter sales advanced nearly 10% and earnings jumped 38% on comparable store sales increase of 4.1% compared to a year ago.
U.S. weekly jobless claims in the week ending on May 18 came in at 281,000, an increase of 21,000 from the previous week, the Labor Department said on Thursday.
Existing home sales declined 2.4% in April, National Association of Realtors said today. Sales declined 5.9% from a year ago.
Home sales declined for the third month in a row to a seasonally adjusted rate of 5.61 million. Home price increase slowed to 14.8% with median price of $391,200.
"Higher home prices and sharply higher mortgage rates have reduced buyer activity," said Lawrence Yun, NAR's chief economist.
"It looks like more declines are imminent in the upcoming months, and we'll likely return to the pre-pandemic home sales activity after the remarkable surge over the past two years."
The U.S. rout sparked a global market selloff and dragged indexes in Asia and Europe down between 1% and 2%.
The DAX index in Frankfurt fell 0.9% to 13,882.09, the CAC-40 in Paris decreased 1.3% to 6,272.72, and the FTSE 100 index in London dropped 1.8% to 7,302.84.
In Tokyo, the Nikkei index declined 1.9% to 26,402.82.
Tech and automakers led the decline in Tokyo and SoftBank Group fell 1.6% to 5,055.00 yen and Recruit Holdings Co fell 4.2% to 4,602.00 yen.
Japan's trade deficit in April rose to 839.2 billion yen (about $7 billion) from the upwardly revised 414.1 billion in March.
Imports were the largest since record keeping began in 1979.
Japan recorded a monthly deficit for the ninth month in a row and swung from a surplus of 227 billion in April 2021.
In Hong Kong, the Hang Seng Index fell 2.5% to 20,120.68, the largest decline since May 6. Hang Seng Tech index fell 4% but the Shanghai Composite Index gained 0.4%, the only gainer in Asian markets.
- Scott Peters
- 19 May, 2022
- New York City
Children's Place Inc, the specialty apparel retailer, reported revenues in the first quarter ending in April declined 16.8% to $362.4 million and net income fell 56% to $19.8 million.
Diluted earnings per share declined 49% to $1.43 from $3.01 a year ago.
The company also said March sales in the current quarter were 35% lower from a year ago on inclement weather across the nation, rising food and energy prices and the expiring of Covid-19 stimulus program kept consumers away.
March temperatures dropped to record two-decade lows in many regions in the country.
Net sales declined 12.1% from $421.4 million in three months ended May 2019 a year.
The retailer has been reducing its network of stores and lowering retail footprint and closed several underperforming stores during the two years of pandemic.
The company closed 7 stores in the quarter and plans to close 50 stores in the year.
The store count declined to 665 from 971 at the pre-pandemic end of first quarter 2019.
At the end of the first quarter, retail square foot space declined 8% to 3.2 million or 30% from the end of first quarter 2019.
In the quarter the company repurchased 660,000 shares for $38.8 million and $218.6 million still available for the program.
Guidance and Outlook
The company said it is no longer providing earnings per share outlook considering the economic and market uncertainties.
The company lowered its full-year 2022 revenues to decline in mid-single digits.
The retailer also held out for its long term goal of growing operating margin and earnings per share in double digits.
Company and Stock
Children's Place stock dropped as much as 10% in pre-market trading after the earnings release but in the regular session jumped 11% to $48.04.
In the year-so-far, Children's Place stock has declined 39.7%.
- Barry Adams
- 19 May, 2022
- New York City
BJ's Wholesale Club surged 9.9% to $58.76 after the discount retailer reported April quarter sales increased 16.2% to $4.5 billion and net income rose 38% to $112.5 million or 87 cents a share.
The company said comparable store sales surged 14.4% and excluding gasoline rose 4.1% from a year ago.
The membership warehouse club reaffirmed its annual earnings per share growth outlook at "flat year-over-year."
Bath & Body Works Inc plunged 10% to $28.76 after the retailer reported first quarter revenues declined 1.3% to $1.449 billion and net income plunged more than 43% to $154 million.
The retailer also guided second quarter earnings between 65 cents and 70 cents and lowered full-year 2022 earnings per share from continuing operations to between $3.80 and $4.15 compared to $4.51 a year ago.
Boeing Co. rose 1.9% to $127.83 after the aerospace company said that IAG, the parent of British, Iberia Air, and Aer Lingus, plans to acquire 50 737 Max jets and hold an option to acquire 100 additional aircrafts.
Children's Place Inc surged 10% to $47.43 after the specialty apparel retailer reported revenues in the first quarter ending in April declined 16.8% to $362.4 million and net income fell 55% to $19.8 million.
The company also said March sales in the current quarter were 35% lower from a year ago on inclement weather across the nation and rising food and energy prices kept consumers away.
The retailer also guided full-year 2022 sales in "a mid-single digit."
Cisco Systems Inc declined 13.2% to $41.78 after the networking systems maker reported flat quarterly sales and guided a decline in sales in the current quarter.
Kohl's Corporation fell 0.7% to $42.73 after the department store chain reported a first quarter and comparable sales declined 5.2% and flat earnings from a year ago.
Revenues decreased to $3.47 billion and net income in the quarter was $14 million.
The retailer also guided full-year 2022 revenues to be between flat and 1% and operating margin between 7% and 7.2% and diluted earnings per share excluding non-recurring charges between $6.45 and $6.85.
Synopsys Inc surged 12% to $305.60 after the electronics design automation software developer reported revenues in the second quarter of fiscal 2022 increased 25% to $1.27 billion.
Net income in the quarter increased to $295 million or $1.89 a share from $195 million of $1.24 a share a year ago.
The company guided earnings per share in the third quarter between $1.32 and $1.44 and full-year ending in October between $6.22 and $6.44.
Target Crop declined 5.2% to $153.04 a day after the company reported a sharp fall in earnings and operating margins. Stock has declined about 32% in two days.
Tesla Inc added 2.6% to $726.45 and briefly traded below $700. The stock has been on the slide since the company's CEO Elon Musk offered to buy micro-blogging platform Twitter pledging the Tesla stock as a collateral.
Tesla has collapsed 38% since Musk announced an offer to buy Twitter in early April.
Stock has also been hurt by the recent tech selloff and ongoing lockdown worries in Shanghai hurting vehicle production.
Under Armour Inc declined 10.3% to $9.45 after the athletic apparel retailer said CEO Patrick Frisk will step down from his responsibilities at the end of the month without giving any reason.
The surprise departure raises questions about the company's turnaround plans.
- Brian Turner
- 19 May, 2022
- New York City
U.S. weekly jobless claims in the week ending on May 18 came in at 281,000, an increase of 21,000 from the previous week, the Labor Department said on Thursday.
The jobless claims rose for the third week in a row.
The seasonally adjusted claims were revised down 6,000 to 197,000 and 4-week moving average increased 8,250 to 199,500.
The so-called continuing claims decreased 25,000 to 1.317 million, the lowest level since December 1969.
The advance seasonally adjusted insured unemployment rate was 0.9 percent for the week ending May 7, a decrease of 0.1 percentage point from the previous week's unrevised rate.
Initial jobless claims have been on the decline after reaching a peak of 6.137 million in April 2020 but have started rising again after reaching a low of 166,000 in March.
Labor market has significantly tightened in two years to March and at the end of the month a record 11.5 million job openings were advertised according to another survey conducted by the Labor Department.
- Barry Adams
- 19 May, 2022
- New York City
Fear dominated financial markets for the second day in a row and indexes lost ground as the S&P 500 sinks to bear territory.
The S&P 500 dropped 0.3% to3,913.19 and the Nasdaq Composite decreased 0.9% to 11,325.81.
Crude oil declined 1% $108.43 a barrel and the yield on 10-year U.S. Treasury notes decreased to 2.789%
The benchmark bond yields rose in seven of the last nine trading days and weekly jobless claims rose the third week in a row.
Investors sold stocks and feared that inflation is finally showing up in corporate results and more pain is likely to follow as the Fed prepares aggressive rate hikes that may tip the economy into a recession.
The twin fears of future faster rate hikes and sustained inflation have been playing out over the last eight weeks and reached a new height on Wednesday.
The earnings miss from Walmart and Target and cautious outlook from Lowe's also fanned the negative sentiment today.
Cisco declined 11% in the pre-market trading after the networking systems maker reported flat quarterly sales and guided revenues to decline in the current quarter.
Kohl's dropped 7% after the general merchandise retailer reported a first quarter and comparable sales declined 5.2% and said earnings per share plunged 90% to 11 cents from $1.05 a year ago.
U.S. weekly jobless claims in the week ending on May 18 came in at 281,000, an increase of 21,000 from the previous week, the Labor Department said on Thursday.
The U.S. rout sparked a global market selloff and dragged indexes in Asia and Europe down between 1% and 2%.
The DAX index in Frankfurt fell 1.8% to 13,750.99, the CAC-40 in Paris decreased 2.06% to 6,222.02, and the FTSE 100 index in London dropped 2.03% to 7,285.88.
Italian insurer Assicurazioni Generali gained 0.5% after the company reported a smaller-than-expected net profit and the insurer took losses in closing down its Russian operations.
In the first quarter to March, the insurer reported a net profit of 727 million euros compared to 802 million euros a year ago.
The current quarter earnings included a charge of 136 million euros on the account of Russian assets impairments.
In Tokyo, the Nikkei index declined 1.9% to 26,402.82.
Tech and automakers led the decline in Tokyo and SoftBank Group fell 1.6% to 5,055.00 yen and Recruit Holdings Co fell 4.2% to 4,602.00 yen.
Japan's trade deficit in April rose to 839.2 billion yen (about $7 billion) from the upwardly revised 414.1 billion in March.
Imports were the largest since record keeping began in 1979.
Japan recorded a monthly deficit for the ninth month in a row and swung from a surplus of 227 billion in April 2021.
Core machine orders rose 7.6% in March to 869.5 billion yen, the Cabinet Office reported today.
In Hong Kong the Hang Seng Index fell 2.5% to 20,120.68, the largest decline since May 6. Hang Seng Tech index fell 4% but the Shanghai Composite Index gained 0.4%, the only gainer in Asian markets.
Ten Cents plunged 6.5% after the operator of Chinese super app WeChat reported flat revenues in the first quarter and a 51% plunge in net income.
In Sydney, the ASX 200 index fell 1.7% to 7,064.50 after retailers plunged. Wesfarmers dropped 8% to an 18-month low, Coles declined 5%, and furniture retailer Norman declined 5.5%.
In Mumbai, the Sensex index declined 2.6% or 1,416.30 to 52,792.23 and the Nifty index fell 2.65% or 430.95 to 15,809.32.
Tech stocks dropped between 5% and 7% following the decline in the U.S.
- Arjun Pandit
- 19 May, 2022
- New York City
Asian markets declined after the key index in the U.S. dropped more than 4%, the largest decline since June 2020.
The fears of rising inflation hitting the corporate earnings and the lagging response from the Federal Reserve Bank added to market anxieties.
Investors are worried on the one hand that the higher interest rates may slow down the economy but on the other hand if rates are not raised fast enough then inflation will get entrenched and eat into corporate earnings.
These conflicting views have been feeding market uncertainty for the last eight weeks.
Global market selloff sparked by the U.S. decline after two leading retailers Walmart and Target reported sharply lower earnings and highlighted rising operating costs.
The earnings results and other economic indicators have been signaling that inflation is entrenching post-pandemic and slowing the economic activities.
In Tokyo, the Nikkei index declined 1.9% to 26,402.82.
Tech and automakers led the decline in Tokyo and SoftBank Group fell 1.6% to 5,055.00 yen and Recruit Holdings Co fell 4.2% to 4,602.00 yen.
Japan's trade deficit in April rose to 839.2 billion yen (about $7 billion) from the upwardly revised 414.1 billion in March.
Exports increased 12.5% to 8.076 trillion yen or $63 billion and imports increased 28.2% to 8.915 trillion yen or $70 billion, the Ministry of Finance reported today.
Imports were the largest since record keeping began in 1979.
Japan recorded a monthly deficit for the ninth month in a row and swung from a surplus of 227 billion in April 2021.
Core machine orders rose 7.6% in March to 869.5 billion yen, the Cabinet Office reported today.
In Hong Kong the Hang Seng Index fell 2.5% to 20,120.68, the largest decline since May 6. Hang Seng Tech index fell 4% but the Shanghai Composite Index gained 0.4%, the only gainer in Asian markets.
Ten Cents plunged 6.5% after the operator of Chinese super app WeChat reported flat revenues in the first quarter and a 51% plunge in net income.
The weak results reflected the fallout from the resurgent Covid-19 virus, the impact of the year-long regulatory crackdown on tech companies, and the headwind from the macro economy.
The weak results from Ten Cents dragged down other tech stocks.
Alibaba Group Holdings fell 7.3%, NetEase declined 2.5%, and Meituan dropped more than 3.7%.
In economic news, Hong Kong unemployment rate increased to 5.4% in three months to April from 5.0% in the previous three months.
Under employment increased to 3.8% in three months to April from 3.1% in the previous three months to March.
In Seoul, the Kospi index declined 1.3% to 2,592.34.
In Sydney, the ASX 200 index fell 1.7% to 7,064.50 after retailers plunged. Wesfarmers dropped 8% to an 18-month low, Coles declined 5%, and furniture retailer Norman declined 5.5%.
The Sensex index declined 2.6% or 1,416.30 to 52,792.23 and the Nifty index fell 2.65% or 430.95 to 15,809.32.
Tech stocks dropped between 5% and 7% following the decline in the U.S.
Tata Consultancy Services dropped 5% to 3,271.90 rupees, Infosys declined 5.2% to 1,431.03 rupees , Tech Mahindra fell 5.03% to 1,113.04 rupees, and HCL Tech plunged 5.8% to 1,011.40 rupees.
Metal and materials stocks also declined more than 4%.
Hindalco fell 4.4% to 417.20 rupees, Tata Steel declined 4.3% to 1,128.95 rupees, and JSW Holdings fell 3.2% to 3,465.05 rupees.
- Scott Peters
- 18 May, 2022
- New York City
Cisco Systems Inc reported sales in the fiscal year third quarter ending in April sales were flat $12.8 billion compared to a year ago and net income increased 6% to $3 billion.
Diluted earnings per share in the quarter increased 7% to 73 cents from a year ago.
Revenues in the Americas rose 5%, Europe and Middle East decreased 6%, and Asia Pacific including China and Japan fell 6%.
Sales were also impacted by one less week in the quarter which resulted in 3% of revenues increase a year ago.
In March, the company also announced suspension of its business in Russia and Belarus which generated revenues of $200 million.
The company also said the product backlog exceeds $15 billion.
Total gross margin declined to 63.3% from 63.9% in the prior year's quarter and operating margin in the quarter was 28.1%.
Deferred revenues increased 7% to $22.3 billion with deferred product revenues up 13% and deferred service revenues up 2%.
In the third quarter of fiscal 2022, the company returned $1.8 billion to stockholders through share buybacks and dividends.
The declared and paid a cash dividend of $0.38 per common share, or $1.6 billion, and repurchased approximately 5 million shares of common stock under our stock repurchase program at an average price of $54.20 per share for an aggregate purchase price of $252 million.
The stock repurchase program has still available $17.6 billion with no termination date.
Guidance & Outlook
The network systems maker guided fiscal fourth quarter revenues to decline between 1% and 5% from a year ago and earnings per share between 60 cents and 70 cents.
In the full fiscal year 2022, revenues are expected to rise between 2% and 3% and GAAP earnings per share between $2.75 and $2.85.
The guidance reflects 52 weeks in fiscal year 2022 compared to 53 weeks in fiscal 2021.
Company and Stock
Cisco Systems is headquartered in San Jose, California and employs about 80,000 people around the world.
Cisco stock dropped 13% in after-market trading after the earnings release and prior to the release has declined 23.4% in the year-so-far at the close of regular trading hours.
- Barry Adams
- 18 May, 2022
- New York City
U.S. stocks fell at the opening and gradually declined and sank to lower lows as the session progressed.
Investors turned cautions after four large retailers Walmart, Target, Lowe's and Home Depot reported weak quarterly results and highlighted inflation and wage pressures, rising freight costs and challenges in managing inventories.
TJX, the operator of TJ Maxx, Marshalls and HomeGoods, reported sharply higher sales and earnings, bucking the trend.
The S&P 500 index declined 4.04% to 3,923.68 and the Nasdaq Composite index fell 4.7% to 11,.418.15.
The indexes closed down after four days of gains.
The Nasdaq Composite sank deeper into bear territory with a year-to-date loss of 27.9% and the S&P 500 index extended losses in the year to 18.2%.
Investors focused on how companies are handling inventories and supply chain problems and were also looking for clues how the consumer is reacting to higher prices at stores and at gas stations.
Walmart said many of its price sensitive customers are switching to store brands and buying fewer items and making fewer trips to stores.
Home Depot also reported fewer transactions but a small increase in average ticket size.
Unusually cold weather also impacted sales of pool supplies, lawn chemicals and other seasonal items forcing retailers to increase markdowns.
However, Target added the consumer is healthy and spending more on items that are linked to experiences such as birthday parties and travel but avoiding high margin discretionary items.
The indexes have been on the defensive for the last seven weeks as rising fuel and food prices are leaving customers with less money to pay for discretionary items.
Target's weak earnings follows Walmart's earnings on Tuesday after the largest retailer lowered expectations for the rest of the year.
On the back of weak results from four leading retailers, stocks in the sector fell and brought down wider indexes as well.
Market is increasingly worried that there is more pain in the economy and the company's valuations are still not reflecting lower future streams of earnings, higher interest rates, slowing down economic conditions.
Dollar General declined 11%, Dollar Tree fell 14%, Five Below plunged 11.4%, Kohl's Corp fell 10.9%, and Macy's decreased 10.6%.
Crude oil fell 3.2% to $109.51 after rising as much as 0.5%.
The yield on 10-year U.S. Treasury notes edged down but traded near 2.877%.
Weekly mortgage applications declined 12% at the end of last week from the previous week and fell 15% from a year ago according to Mortgage Bankers Association.
Separately, home builders association reported the confidence index declined 8 points to 69 in May, a fifth monthly decline in a row and lowest since June 2020.
The single family starts in April declined 7.3% to 1.1 million units annual rate adjusted for seasonal factors, according to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
The multifamily sector, which includes apartment buildings and condos, increased 15.3% to an annualized 624,000 rate.
European markets turned negative on the growing worries of rising inflation and lagging central bank's response.
The U.K. inflation accelerated to 9% in April from 7% in March driven by rising food and fuel prices, the Office of National Statistics said today.
The 40-year high inflation is likely to peak in October around 10% before it declines.
Moreover, new car registration in the European Union declined for the fourth month in a row in April. the European Automobile Manufacturers' Association said today.
The DAX index declined 1.3% to 14,007.76, the CAC-40 index dropped 1.2% to 6,352.94, and the FTSE 100 index fell 1.07% to 7,438.09.
Asian markets closed mixed after Japan reported GDP and industrial production data.
Japan's GDP in the first quarter contracted at 1% annualized rate, the Cabinet Office said today. The preliminary data showed that the economy rose at 0.2% rate after adjusting for seasonality factors.
The decline was less than the 1.8% fall estimated by many economists. The GDP growth data for the previous quarter was lowered to 3.8% increase from the 5.4% rise in the preliminary estimate.
The weakness in international trade dragged the economic activities lower.
Industrial production in March rose 0.3% after adjusting for seasonal factors, the report from the Ministry of Economy, Trade and Industry noted today.
In Tokyo, the Nikkei index increased 251.45 or 0.94% to close at 26,911.20.
Market indexes in Australia rose nearly 1% but in India and South Korea eased and in Hong Kong edged higher.
- Barry Adams
- 18 May, 2022
- New York City
European markets turned negative on the growing worries of rising inflation and lagging central bank's response.
The U.K. inflation accelerated to 9% in April from 7% in March driven by rising food and fuel prices, the Office of National Statistics said today.
The 40-year high inflation is likely to peak in October around 10% before it declines.
Moreover, new car registration in the European Union declined for the fourth month in a row in April. the European Automobile Manufacturers' Association said today.
New Passenger vehicle registration fell 20.6% in April after falling 20.5% in March.
The April month data was the weakest since record keeping began except the pandemic year 2020. About 684,506 passenger vehicles were registered in April compared to 862,443 registrations a year ago.
From January to April of 2022, new car registrations declined 14.4% across the EU, totaling 2,930,366 units.
Supply disruptions and chip shortages weighed heavily on manufacturers.
The DAX index declined 1.3% to 14,007.76, the CAC-40 index dropped 1.2% to 6,352.94, and the FTSE 100 index fell 1.07% to 7,438.09.
- Scott Peters
- 18 May, 2022
- New York City
Lowe's Companies, Inc reported first quarter ending in April 2022 sales decreased 3.2% to $23.66 billion and flat net income of $2.33 billion.
Diluted earnings per share in the quarter rose to $3.51 from $3.21 a year ago.
The retailer also increased dividend per share to 80 cents from 60 cents a year ago.
Unusually cold weather in the quarter impacted sales of outdoor seasonal categories.
Operating margin in the quarter rose 65 basis points to 13.96 and the company is looking to improve more in the current year.
Consolidated comparable sales declined 4% in the quarter and fell 3.8% at the U.S. stores.
Comparable sales rose 19.7% on a two-year basis.
About 75% of Lowe's customers are working on remodeling or DIY projects and are sensitive to recent fuel price increases and consumers are replacing their fuel inefficient lawn mowers and laundry machines to battery powered machines.
Guidance & Outlook
The home improvement retailer expects full-year 2022 revenues between $97 billion and $99 billion on a 53-week year basis compared to the 52-week year in 2021.
The company also estimated between $1.0 billion and $1.5 billion in revenues in the 53rd week.
Comparable sales are expected to range between 1% rise and fall and operating margin is expected to be between 12.8% and 13%.
Diluted earnings in the year are expected to be between $13.10 and $13.60.
The company also plans to repurchase total shares of approximately $12 billion.
Company & Stock
As of April 29, 2022, Lowe