Markets waver as traders assess fresh earnings

Dow dropped 146, advancers over decliners about 2-1 & NAZ added 30.  The MLP index was up 1+ to the 174s & the REIT index hardly budged in the 375s.  Junk bond funds inched higher & Treasuries saw a little buying which reduced yields slightly (more below).  Oil went up to the 78s & gold crawled up 4 to 2023.

AMJ (Alerian MLP Index tracking fund)

Macy's (M) sales fell nearly 2% in the holiday qtr, as the 166-year-old department store operator unveiled its strategy to get back to growth.  It expects sales to remain stagnant, projecting net sales of $22.2-22.9B for this fiscal year, down from $23.09B in 2023.  Macy's anticipates comparable sales, which take out the impact of store openings & closures, will range from a decline of about 1.5% to a gain of 1.5% compared with the year-ago period on an owned-plus-licensed basis & including 3rd-party marketplace sales.  Yet the new CEO, Tony Spring, laid out a brighter outlook for the following fiscal year & how Macy's plans to get there.  Spring is the former CEO of Macy's higher-end department store Bloomingdale's, weeks after Macy's announced layoffs & as it faced pressure from activist investors.  In the fiscal year that starts in early 2025, Macy's expects low-single-digit comparable sales growth on an annual basis, including owned, licensed & marketplace sales.  It said it expects capital spending to fall below 2024 levels & free cash flow to drop to pre-pandemic levels.  The outlook does not include any potential impact from a proposed credit card late fee ruling by the federal gov.  For the fiscal 4th qtr, Macy's swung to a loss of 26¢ per share, versus EPS of $1.83 per share, a year earlier.  The losses included $1B of impairment & restructuring costs related to its plans to close about 150 locations, which are part of its turnaround strategy.  Revenue fell from $8.26B in the year-ago period.  Digital sales declined 4% compared with the prior-year qtr, & brick-&-mortar sales were roughly flat.  Across the company, comparable sales on an owned-plus-licensed basis fell 4.2% from the year-ago period.  That was better than the 5.8% decline that was expected.  The stock rose 70¢.

Macy’s posts another quarter of falling sales as it unveils new strategy

Lowe's (LOW) beat quarterly earnings & revenue estimates, even as the company continued to see customers tackle fewer home projects.  The home improvement chain was going up against lower expectations for its 4th qtr.  It had cut its full-year forecast in Nov after CEO Marvin Ellison said the company had felt a “greater-than-expected pullback” on pricier items & discretionary home projects.  LOW factored economic uncertainty into its forecast for the current fiscal year, too.  It expects total sales of $84-85B, which would be a drop from $86.4B in fiscal 2023.  Comparable sales will decline 2-3% compared with the prior year, & expects EPS of $12.00 - $12.30.  “Our perspective of 2024 is that we’re going to feel this DIY [do-it-yourself project] pressure throughout the year and we’re going to perform at a high level irrespective of what kind of macroeconomic environment we’re dealing with,” Ellison said.  EPS for the 3-month period that ended Feb 2 was $1.77, compared with $1.58, a year earlier.  Excluding the costs associated with the sale of its Canadian retail business, EPS were $2.28.  Sales fell from $22.4B in the year-ago period.  The prior-year qtr included an additional week & sales from its Canadian business.  Comparable sales dropped by 6.2% year over year, as the home improvement retailer saw weaker demand for do-it-yourself projects & poor weather in Jan.  Comparable sales for home professionals, a category that includes plumbers, electricians & contractors, were flat year over year in the qtr, however.  The stock jumped 6.17.

Lowe’s beats earnings estimates as sales fall — and the company expects revenue to slide this year

Treasury yields slipped after a large drop in durable goods orders raised some questions about the stability of the economy.  The moves were muted as investors awaited a key inflation report later in the week.  The yield on the 10-year Treasury yield was down 1 basis point at 4.289% & the 2-year Treasury yield was last trading at 4.689% after dipping by around 3 basis points.  Yields & prices move in opposite directions & 1 basis point is equivalent to 0.01%.  Investors considered the state of the economy as they looked to data for hints about how it is faring amid higher interest rates & persistent inflation.  Data from the Dept of Commerce showed that orders for long-lasting goods declined more than expected in Jan, with the leading factor being a large drop in demand for transportation.  Durable goods orders tumbled 6.1% on the month, worse than the downwardly revised 0.3% decline in Dec & the estimate for a drop of 5%.  Transportation was the main culprit for Jan's slide, down 16.2%.  Several further key economic reports are slated for the week that could also provide insight on what the path ahead for Federal Reserve interest rates could look like.  This includes the personal consumption expenditures price index, which is a key inflation measure for the Fed.  Fed officials have repeatedly said their decision-making would be data-led & are looking for further evidence that inflation is moving toward the 2% target.  The most recent inflation data for Jan, however, came in hotter than expected, suggesting to investors that inflation could be more persistent than anticipated.

U.S. Treasury yields ease on weak economic data as investors await key inflation report

The stock market is quiet today while traders are digesting economic data.

Dow Jones Industrials