Dow sank 707, decliners over advancers about 3-1 (relatively mild considering all the selling) & NAZ slumped 311. The MLP index was off 2 to 211 & the REIT index fell 5+ to the 427s. Junk bond funds were sold along with stocks & Treasuries saw modest buying, reducing yields. Oil was off 1 to the 111s & gold fell 6 to 1812.
AMJ (Alerian MLP index tracking fund)
Tarrget (TGT), a Dividend Aristocrat, profit halved & it warned of a bigger margin hit due to rising fuel & freight costs, in a clear sign that deep-pocketed US retailers are no longer immune to surging Ceo Brian Cornell said. "These (costs) continue to grow almost on a daily basis and there is no sign right now...that it is going to abate over time." TGT said rising fuel & freight expenses will add nearly $1B more than originally expected in annual cost. Its quarterly
gross margin dipped to 25.7% from 30%. Many companies have dealt
with inflation by raising product prices, but the retailer has so far looked to undercut peers by doing that only for some
products. "(Pricing) continues to be the last lever we pull," CFO
Michael Fiddelke said. "While we don't like the impact to our
profitability in the short term, we know it is the right thing to do." Keeping
a large section of its products affordable have helped comparable sales to grow 3.3% in the 3 months ended Apr 30, above
expectations for a 0.5% increase. The
company maintained its full-year sales forecast, but predicted that
operating margin will grow at a slower pace of around 6% compared to a
prior forecast of 8% or higher. Total revenue rose by a better-than-expected 4% to $25.2B. Net profit fell 52% to $1B. Excluding items, EPS was $2.19. The stock plunged 53 (25%).
If you would like to learn more about TGT click on this link:
club.ino.com/trend/analysis/stockTGTa_aid=CD3289&a_bid=6ae5b6f
Target profit halves on rising costs, warns of bigger margin hit
Lowe's (LOW) reported a bigger-than-expected drop in same-store sales, as cold & wet weather during Apr hit demand for seasonal goods. Same-store sales decreased 4% in Q1 ended Apr 29, compared with expectation of a 2.5% fall. LOW
is dependent on do-it-yourself (DIY) customers for sales. The
return of people to offices is affecting demand from DIY customers. "Because 75% of our customer base is DIY, our Q1 sales were disproportionately impacted by the cooler spring temperatures," Ceo Marvin Ellison said. Net earnings edged higher to $2.3B ($3.51 per share), from
$2.3B ($3.21 per share) a year earlier. Analysts had expected
EPS of $3.22. LOW reaffirmed its fiscal 2022 outlook. The stock tumbled 9 (5%).
If you would like to learn more about LOW click on this link:
club.ino.com/trend/analysis/stockLOWa_aid=CD3289&a_bid=6ae5b6f
Lowe's sales disappoint as late spring hurts seasonal demand
Corp execs are taking a dim view of their prospects, with a majority now expecting a recession ahead, according to a closely watched business survey. The Conference Board measure of CEO sentiment showed that 57% of respondents expect inflation to come down “over the next few years” but the economy to sustain a “very short, mild recession.” Those results reflect an overall pessimistic tone from the quarterly gauge, as the board’s Measure of CEO Confidence fell to 42, a steep drop from Q1's 57 & the lowest since the early days of the Covid pandemic. Anything below 50 represents a negative outlook as the number measures the level of respondents expecting expansion over those seeing contraction. That reading “is consistent with slowing for sure,” Roger Ferguson, vice chair of the Business Council & a trustee of The Conference Board said. “All of this is telling us that the combination of inflation that is much too high to quote [Federal Reserve Chairman] Jay Powell, wages that are increasing but not keeping up with inflation, and then the inability to pass all this along is creating a very challenging dynamic,” said Ferguson, a former Fed vice chair. The recession expectation reading wasn't the only bad news out of the report. Just 14% of CEOs reported that business conditions had improved in Q2, down from 34% in Q1. Similarly, 61% said conditions were worse, compared to 35% in the prior reading. Only 19% see improvement ahead, down from 50%, while 60% expect things to worsen, up from 23%. One piece of good news was that 63% expect to hire in the next qtr, down only slightly from 66% in Q1. However, some 80% said they were having problems getting qualified workers, down just slightly, while 91% see wages rising by more than 3% over the next year, up from 85% in Q1. Also, just 38% expect to increase capital spending, a sharp decline from 48% previously. Some 20% see stagflation conditions of low growth & high inflation. Ferguson said the survey “suggests that this set of circumstances is not likely to get better anytime soon and consequently pressures on the middle and bottom line for businesses, pressure on the household sector, pressure at the CEO level, and, quite frankly, pressures on the Federal Reserve.”
More than half of CEOs are expecting a recession ahead, survey shows
This is an unusually dreary day for stocks as the bulls can not find any friends. The popular stock indices are plunging on what looks to be an economy that is in trouble. Unemployment data is fairly strong but the GDP looks like it will be reporting another down qtr in Q2. Even if the retreat is mild, that would meet the definition of a recession (2 consecutive declining qtrs). Meanwhile interest rates are rising with more hikes coming. Grrr!!Dow Jones Industrials
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