Markets mixed while bulls are holding back on purchasing stocks

Dow went up 44, advancers & decliners were about even & NAZ was flat.  The MLP index wobbled in the 282s & the REIT index hardly budged at 377.  Junk bond funds inched higher & Treasuries were a tad lower bringing slightly higher yields.  Oil slid lower in the 79s & gold pulled back 3 to 2435 (still in record territory).

AMJ (Alerian MLP Index tracking fund)

Federal Reserve Gov Christopher Waller, citing a string of data showing that inflation appears to be easing, said that he does not think further interest rate increases will be necessary.  However, the policymaker added he will need some convincing before he backs cuts anytime soon.  “Central bankers should never say never, but the data suggests that inflation isn’t accelerating, and I believe that further increases in the policy rate are probably unnecessary,” said Waller, who has recently been hawkish, meaning he supports tighter monetary policy.  Waller pointed to a string of recent data, from flattening retail sales to cooling in both the manufacturing & services sectors, to suggest that the Fed's higher rates have helped ease some of the demand that had contributed to the highest inflation rates in more than 40 years.  Though payroll gains have been solid, internal metrics, such as the rate at which workers are leaving their jobs, show that the ultra-tight labor market that had driven up wages last a level consistent with the Fed's 2% inflation goal has displayed signs of loosening, he added.  Yet Waller, who as a governor is a permanent voting member of the rate-setting Federal Open Market Committee, said he's not ready to back interest rate cuts.  “The economy now seems to be evolving closer to what the Committee expected,” he noted.  “Nevertheless, in the absence of a significant weakening in the labor market, I need to see several more months of good inflation data before I would be comfortable supporting an easing in the stance of monetary policy.”  Waller did not give his expectations on the timing or extent of cuts & said that he would “keep that to myself for now” on what specific progress he wants to see on future inflation reports.

Fed Gov. Waller wants ‘several months’ of good inflation data before lowering rates

Macy's (M) fiscal first-qtr earnings topped expectations & the retailer's revenue came in roughly in line with revenue expectations as it pointed to early signs of momentum in its turnaround strategy.  The department store operator raised its full-year earnings expectations to reflect the first-qtr beat, along with the low end of its sales outlook.  But the retailer said that it “assumes customers will continue to be discerning in their discretionary purchases.”  CEO Tony Spring said the company is in the “early innings” of turning around its namesake stores.  As the retailer has stepped up investments at 50 of its Macy's stores, customers have responded by visiting more often & buying more when they do.  “We need more variety,” he added.  “We need less redundancy. We need more interest within the assortment and I think that’s making a difference in the customer’s reception to the stores.”  Macy's anticipates net sales of $22.3-$22.9B, which would still represent a drop from $23.09B in 2023.  It expects comparable sales, which take out the impact of store openings & closures, to range from a decline of about 1% to a gain of 1.5% on an owned-plus-licensed basis & including 3rd-party marketplace sales.  It had previously expected comparable sales to decline as much as 1.5%.  It expects adjusted EPS of $2.55-2.90, raising its previous outlook of $2.45-2.85.  The retailer said it will invest in parts of the business that have fared better, including the roughly 350 Macy's stores that will stay open.  It plans to open more Bloomingdale's & Bluemercury locations, & smaller Macy's stores in suburban strip malls.  The stock fell 19¢.

Macy’s beats earnings estimates, as turnaround plan shows early progress

Lowe's (LOW) topped quarterly earnings & revenue expectations, even as do-it-yourself customers bought fewer pricey items.  LOW stuck by its full-year forecast.  LOW expects total sales of $84-$85B, which would be a drop from $86.4B in fiscal 2023.  It anticipates comparable sales will decline 2-3% compared with the prior year, & expects EPS of approximately $12.00-12.30.  CEO Marvin Ellison said “the home improvement customer is still on the sideline expressing concerns about higher cost of living and the state of the overall economy.”  He said a mix of factors have kept them from spending more freely, including continued pressure from inflation & uncertainty around when the Federal Reserve may cut interest rates.  In the 3-month period that ended May 3, EPS was $3.06, compared with $3.77 a year earlier.  Sales dropped from $22.4B in the year-ago period.  It marked the 5th qtr in a row that LOW posted a year-over-year sales decline.  LOW is lapping a year-ago qtr when the company slashed its full-year outlook & posted a year-over-year sales decline.  At the time, Ellison warned investors that the retailer expected “a pullback in discretionary consumer spending over the near term.”  For each of the 3 qtrs since then, sales have also dropped from the year-ago periods.  The stock dropped 6.23.

Lowe’s beats on earnings, revenue, even as consumers spend less on DIY projects

Investors watch quarterly reports from retailers for guidance on consumer spending & the health of the economy.  This is earnings season from retailers & they have been underwhelming.  Nervous investors keep buying gold.

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