Markets edge lower ahead of earning reports this week

Dow slid back 12. decliners modestly ahead of advancers & NAZ slid back 152.  The MLP index stayed in the 267s & the REIT index was even in the 377s.  Junk bond funds crawled higher & Treasuries had buying which reduced yields (more below).  Oil was down fractionally to the 78s & gold went up 14 to 2038.

AMJ (Alerian MLP Index tracking fund)

Walmart (WMT), a Dow stock & Dividend Aristocrat, quarterly revenue rose 6%, as shoppers turned to the big-box retailer throughout the holiday season & the company's global e-commerce sales grew by double digits.  The retail giant also said that it would acquire smart TV maker Vizio (VZIO) for $2.3B to accelerate growth of its advertising business.  CFO John David Rainey said customers have still shown discretion with purchases.  They are putting fewer items in their baskets but shopping more frequently, he said.  Electronics, TVs, computers & some other expensive items have been a tougher sell, Rainey added.  Yet, he said added after the holiday rush, WMT saw continued sales strength.  In the 3-month period that ended Jan 31, EPS fell to $2.03 compared with $2.32 & revenue increased from $164B in the year-ago period.  WMT expects consolidated net sales to rise 4-5% in its fiscal first qtr.  It also anticipates adjusted EPS of $1.48 - $1.56 on a pre-stock split basis.  For its fiscal 2025, the retailer expects consolidated net sales will climb 3-4% & anticipates adjusted EPS of $6.70 - $7.12 on a pre-stock split basis.  Comparable sales, an industry metric also known as same-store sales, rose 4% for WMT US & Sam’s Club, comparable sales increased 1.9%, including fuel.  Global e-commerce sales jumped 23% year over year, topping $100B in total.  In the US, e-commerce rose 17% as shoppers used curbside pickup & got orders delivered to their homes.  The stock rose $5.92 (3%).

Walmart beats Wall Street’s holiday expectations as e-commerce sales soar

Treasury yields turned mostly lower as uncertainty about the outlook for the economy & interest rates lingered.  The yield on the 2-year Treasury was 5 basis points lower at 4.606 % the 10-year Treasury  yield was last off nearly 2 basis points to 4.279%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  Treasury yields had climbed Fri as a hotter-than-expected producer price index report added to concerns about sticky inflation.  Markets were closed yesterday.  The PPI increased by 0.3% in Jan, higher than the 0.1% rise expected.  The core CPI, which excludes food & energy prices, rose by 0.5%, also above the forecast 0.1%.  That came after the consumer price index for Jan also came in above expectations last week, reflecting increases of 0.3% on a monthly basis & 3.1% on an annual basis.  The data suggested to many investors that inflation could be more persistent than they had been hoping for & that interest rate cuts may be further away than previously expected.  Federal Reserve officials have said numerous times in recent months that their decision-making around when rate cuts will begin will be data-led.  They've suggested they’re looking for more evidence that inflation is easing before cutting rates.

2-year Treasury yield falls as investors weigh economic outlook

The Middle East looks set for a path of escalation on multiple fronts as Israeli forces close in on what is left of southern Gaza & as Yemen’s Houthi rebels launch their most damaging strike yet on a ship in the Red Sea.  The crew of the British-owned, Belize-flagged bulk carrier MV Rubymar were forced to abandon ship in the Gulf of Aden yesterday, receiving help from a nearby merchant vessel & coalition warship to reach a nearby port after “two anti-ship ballistic missiles were launched from Iranian-backed Houthi terrorist-controlled areas of Yemen,” according to US Central Command.  A Houthi military spokesman claimed the group's responsibility for the attack, calling it their most severe yet.  The group claim to support Palestinian civilians amid Israel's retaliatory military campaign in the Gaza Strip.  “The ship was severely damaged, leading to its complete halt … It is now at risk of sinking in the Gulf Aden,” he said yesterday.  Simultaneously, fighting is raging between Israel & Hamas in the Gaza Strip with no sign of abating despite diplomatic efforts by a number of countries.  Israel's gov has warned of a potential ground invasion of Rafah, Gaza's southern corner along the Egyptian border where more than 1.5M Palestinians, the majority of whom were displaced from other parts of Gaza, are sheltering, mostly in makeshift tents with very little access to food, water & medicine.

Middle East escalation fears spike as Houthis launch most damaging attack yet

Dow started in the red & then was up to around even.  Recent data has challenged the idea the economy is headed for a future where inflation falls to the Fed's 2% target without a severe downturn, prompting a pullback in bets for a spring interest rate cut.  This week minutes from the last Fed meeting are due tomorrow along with earnings reports largely from retailers.

Dow Jones Industrials