Markets plunge as higher interest rates shake investors

Dow tumbled 697 (session lows), decliners over advancers almost 7-1 & NAZ retreated 294.  The MLP index declined 2+ to the 225s & the REIT index dropped 7+ to the 390.  Junk bond funds continued to be sold & Treasuries saw very heavily selling, taking the yield on the 10 year Treasury up 12 basis points to a hefty 3.94%.  Oil was off slightly to 78 & gold lost 8 to 1842 (more on both below).

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Walmart (WMT), a Dow stock & Dividend Aristocrat, topped holiday qtr earnings expectations, as the discounter said it drew budget-conscious shoppers searching for food, gifts & household items at a lower price.  The company expects same-store sales for Walmart US to rise 2-2.5% excluding fuel, in the fiscal year ahead.  That's below expectations for 3% growth.  It anticipates adjusted EPS of $5.90-6.05, excluding fuel.  CFO John David Rainey said shoppers are still buying fewer discretionary items, as grocery prices remain elevated. that  was factored into its predictions for the year ahead.  “The consumer is still very pressured,” he added.  “And if you look at economic indicators, balance sheets are running thinner and savings rates are declining relative to previous periods. And so that’s why we take a pretty cautious outlook on the rest of the year.”  EPS was $2.32, up from $1.28 a year earlier.  Revenue of $164B marked a 7.3% year-over-year increase.  Same-store sales for Walmart US rose 8.3%, excluding fuel.  The key industry metric that includes sales from stores & clubs open for at least a year.  E-commerce sales jumped by 17% year over year for Walmart US.  The stock finished up 87¢.
If you would like to learn more about WMT, click on this link:
club.ino.com/trend/analysis/stock/WMT_aid=CD3289&a_bid=6ae5b6f7

Walmart gives soft outlook for the year after posting strong holiday quarter

Home Depot's (HD), a Dow stock, revenue fell short of estimates in its fiscal 4th-qtr earnings report amid a slowdown in the home improvement category.  The company also provided a muted outlook for the next year because of a tough consumer backdrop.  It's the first time HD missed revenue expectations since Nov 2019, before the Covid pandemic.  In the qtr HD reported $35.83B in sales, up 0.3% from the year ago period, which saw $35.72B in revenue.  EPS was $3.30, also 0.3% higher than the year ago period, which was $3.21.  Amid record levels of inflation, a shift in consumer behavior & a housing market slowdown, the home improvement retailer has repeatedly beat expectations over the last year but fell a bit short in sales estimates.  The company attributed that solely to a drop in lumber costs, which had surged in price due to nationwide shortages in fiscal 2021 but are now down about 50% year over year.  “But for that we would have been right in line with our expectations,”  CFO Richard McPhail said.  “After two years of high volatility, we’ve seen a little more stability in recent weeks and months, but it’s hard to predict lumber prices.”  “After two years of high volatility, we’ve seen a little more stability in recent weeks and months, but it’s hard to predict lumber prices.”  HD expects sales & comparable sales to be approximately flat for the new fiscal year.  It projects an operating margin rate of about 14.5%, which is impacted by a $1B investment HD is making in wage growth.  The retailer issued the muted outlook because it expects some pressure in the goods sector & flat consumer spending, McPhail said.  The stock sank 22+ (7%).
If you would like to learn more about HD, click on this link:
club.ino.com/trend/analysis/stock/HD_aid=CD3289&a_bid=6ae5b6f7

Home Depot misses revenue expectations for the first time since +

Pres Biden spoke to a crowd of thousands in Warsaw, Poland, to mark the coming one-year mark since Russia invaded Ukraine, vowing to support beleaguered Ukraine & placing the war in the broader context of a struggle between authoritarianism and democracy.  “One year ago, the world was bracing for the fall of Kyiv,” Biden said.  “Well I’ve just come from a visit to Kyiv and I can report Kyiv stands strong, Kyiv stands proud, it stands tall and most important, it stands free.”  His remarks follow a surprise 23-hour visit to Ukraine's war-weary capital yesterday.  Under extraordinary secrecy, Biden traveled by plane, then by train for 10 hours overnight to stand shoulder-to-shoulder in solidarity with Ukrainian Pres Volodymyr Zelenskyy.  The one-year anniversary of the invasion is Fri.  His speech struck a similar tone to others Biden has made, including one he gave in Warsaw nearly a year ago.  Since his 2020 presidential campaign, Biden has posited himself as a champion of democracy, arguing the US & world is at a crossroads.  “When President Putin ordered his tanks to roll into Ukraine he thought we would roll over. He was wrong,” Biden said.  “He thought NATO would fracture and divide. Instead NATO is more united, more unified than ever before.”  The remarks further highlighted the US commitment to Ukraine, which aims to repel a renewed Russian assault that began shortly before the one-year anniversary of the conflict.  “One year into this war, Putin no longer doubts the strength of our coalition, but he still doubts our conviction. He doubts our staying power,” Biden added.  “But there should be no doubt, our support for Ukraine will not waiver. NATO will not be divided and we will not tire.”

Biden says Russia will ‘never’ win as he pledges support for war-weary Ukraine

Gold futures declined to mark their lowest finish early Jan.  Despite the sharp rise in Treasury yields & the strength of the $, gold prices are only slightly weaker, perhaps reinforcing the idea that these $ moves have more to do with position adjustments ahead of tomorrow' Fed minutes, which could come out as unexpectedly hawkish.  Gold for Apr fell $7 (0.4%) to settle at $1842 an ounce, the lowest most-active contract finish since Jan 5.

Gold Futures Mark Lowest Finish Since Early January

Oil fell, extending its loss from last week with US prices marking the expiration of the Mar futures contracts.  The rise in both the $ & short-duration Treasury yields stoked concerns about the Federal Reserve crushing the economy with too-aggressive policy decisions this year,.  From a demand standpoint, recessions are clearly not a positive situation for consumption of refined products.  US benchmark West Texas Intermediate crude for Mar, which expired at the end of the trading session, fell 18¢ to settle at $76.16 a barrel.  Apr WTI, which is now the front-month futures contract, settled at $76.36, down 19¢.

Oil futures end lower as uncertainty blurs the demand outlook

Dow finished near the low end of its 4 month trading range of 33-34K.  Higher interest rates are getting thru to most everybody with the prospect of higher-for-longer interest rates.  The glum outlooks from 2 retail giants, WMT & HD, added to nervousness by investors.  Even safe haven gold is having a tough time attracting fans.

Dow Jones Industrials