Wednesday, May 16, 2018

Markets edge higher on Macy's earnings

Dow rose 40, advancers over decliners 2-1 & NAZ added 30.  The MLP index rose fractionally to the 264s & the REIT index gave back 5+ to the 329s.  Junk bond funds fluctuated & Treasuries were flat with the yield on the 10 year Treasury holding at 3.08%.  Oil slid below 71 & gold was off 1 to 1288 after yesterday's big decline.

AMJ (Alerian MLP Index tracking fund)

stock chart

CL=FCrude Oil70.91

GC=FGold  1,290.60

3 Stocks You Should Own Right Now - Click Here!

Stocks were flat, with traders following Treasury yields, as well as the latest economic data reports & corp earnings.  North Korea canceled a high-level meeting with South Korea over US-South Korean military drills & says it has no interest in the summit with Trump if it's going to be a "one-sided" affair where it's pressured to give up its nukes.  The latest reading on the housing sector was released, which showed home-builder permits fell 1.8% in Apr to a 1.35M rate while housing starts dropped 3.7% in Apr to a 1.29M rate.  Other economic data included US industrial capacity which rose to 78 in Apr from a revised 77.6 in Mar.  Stocks fell yesterday, ending the Dow's 8-day winning streak as a mixed earnings reports & rising Treasury yields weighed on the market.  The benchmark Treasury yield steadied today after climbing above 3% yesterday to hit its highest mark in 7 years, potentially raising borrowing costs for consumers & businesses.  The yield on the 10-year Treasury was steady after climbing to a 7-year high on yesterday.  In commodities, gold was lower, even after closing at its lowest price of the year on yesterday.  Oil futures were also lower.

Stocks cautious as North Korea tensions weigh on markets

US builders broke ground on fewer apartment buildings last month, pushing overall home construction down 3.7% from Mar.  The Commerce Dept said that housing starts fell to a seasonally adjusted annual rate of 1.29M in Apr, lowest since Dec.  Apartment construction tumbled 12.6% to 374K.  Construction of single-family homes blipped up 0.1% to 894K.  Still, housing starts are up 10.5% from Apr 2017 on a 7.2% increase in single-family homes & a 19.1% surge in apartments.  Home construction has grown steadily since the housing crash hit bottom in 2012.  The pace of homebuilding is still below its long-run average of about 1.5M a year, which has led to a shortage of homes on the market.  Millennials are increasingly moving out on their own to buy their own homes.  Demand for housing is strong despite an uptick in mortgage rates: The rate on the benchmark 30-year, fixed-rate home loan is 4.55%, up from 4.05% a year ago.  In Apr, housing starts fell 16.3% in the Midwest, 12% in the West & 8.1% in the Northeast.  They rose 6.4% in the South.  Building permits, an indicator of future construction, fell 1.8% in Apr to a seasonally adjusted 1.35M rate.

US home building slides 3.7% in April

Macy’s shares soared after the company released its latest quarterly results, which surpassed expectations, as the company experienced double-digit growth in its digital business while same-store sales blew past expectations.  The better-than-expected results prompted the retailer to hike its full-year 2018 forecast.  EPS was 48¢ (adjusted), topping the estimate for 37¢ on revenue of $5.54B, also beating the estimate for $5.36B.  In the year-ago period, Macy's reported an adjusted EPS of 24¢ on revenue of $5.34B.  Same-store sales on an owned basis grew 3.9% & by 4.2% on an owned-plus-licensed basis, well above the consensus for a same-store sales increase of 0.7%.  Macy's announced that it will end its joint venture with China’s Fung Retailing, but will remain on Alibaba Group (BABA) Tmall platform & social media channels.  The company said that most of the benefits of its strategic initiatives will be seen in H2.  Macy's increased its fiscal 2018 EPS expectations 20¢ to $3.75-$3.95, excluding certain charges.  Sales are expected to range from a 1% decline to a 0.5% increase from $24.8B last year compared to the prior call for a decline of 0.5%-2%.  Full-year same-store sales on an owned-plus-licensed are expected to be up 1%-2%.  The stock shot up 1.85 (6%).
If you would like to learn more about Macy's, click on this link:

Macy’s easily beats forecasts, lifts full-year expectations

Not too much going on stock market after North Korea appears to be pulling out of its talks with the US.  As usual in these situations, it's all fluid.  Higher interest rates are real & that is getting thru to traders.  But they are shrugging off that news today.  The Dow still has a good rise in May, shown below.  The future remains fuzzy with all that is going on, especially the trade talks.

Dow Jones Industrials

No comments: