Dow went up 119, advancers over decliners 2-1 & NAZ gained 210. The MLP index inched up 1+ to the 321s & the REIT index stayed in the 419s, yesterday's close. Junk bond funds barely budged & Treasuries were even. Oil was flat at 69 & gold recovered 7 at 2926.
Dow Jones Industrials
A new analysis by the Bank of America Institute finds that small businesses appear to be gaining financial momentum,
though policy changes related to tariffs could spur inflation & with
it a new challenge to profitability. The Bank of America Institute's report analyzed the bank's small business account data & found that in the 6-month period from Aug-Jan, deposit growth among small business clients surpassed total
payments growth for the first time in 3 years. "The positive
is that revenues are rising and we're seeing that for the first time
over the past three years where deposits are outpacing payments, so
that's really good momentum entering 2025 and small business optimism is
up," Bank of America economist Taylor Bowley said. "But
that doesn't mean that there isn't still risk for cost pressures to curb
small business enthusiasm and growth going forward." While
inflation has slowed substantially since its 40-year high of 2022, it
remains elevated & its impact on wages has contributed to continuing
cost growth for small businesses. "Revenues seem to be rising, which is a really good thing because
small businesses historically operate on pretty small profit margins,"
Bowley added. "But the one thing is that costs don't necessarily seem to
be declining." Bowley said that payroll is 1 of the largest expense categories for small businesses & that wage inflation as it relates to payroll has been a key factor in rising costs faced by
those companies, though workforce expansion may also be a factor. "Wage inflation is not the sole driver in terms of what we're seeing
with payroll growth. It's an indication that small businesses are still
able to keep people on the payroll, and also potentially expand their
labor force," she continued.
Lowe's (LOW) topped quarterly earnings & revenue expectations & said its sales slump should end in the year ahead. Full-year total sales are expected to $83.5-84.5B, which on the upper end would be higher than its total revenue
of $83.7B for fiscal 2024. It said it expects comparable sales
to be flat to up 1% year over year & EPS to be $12.15 - $12.40. CEO Marvin Ellison stressed that LOW still faces “a challenging home improvement market.” High mortgage rates have created “a significant gap between
today's rates for homebuyers and the lower rates many homeowners
currently enjoy.” That's led to a “lock-in effect,” which has kept
consumers from buying & selling. Even so, LOW has pressed ahead with its own strategy, so it is
“well-positioned to capitalize on the home improvement recovery and take
share when the market inflects.” Shares rose after the company’s
leaders said they expected sales trends to improve, but still be
roughly flat from last year. In
the 3-month period that ended Jan 31, EPS was $1.99, compared with $1.77 in the year-ago period. Revenue fell from $18.6B in the year-ago qtr. Adjusted EPS figure excluded an $80M pretax gain
associated with the 2022 sale of its Canadian retail business, which
added 6¢ per share to 4th-qtr earnings. In the fiscal 4th qtr, trends looked better. Comparable sales
rose 0.2%, boosted by online gains, high single-digit growth among home
professionals & sales related to rebuilding efforts after hurricanes
Milton & Helene. That slightly positive metric ended 8 consecutive
qtrs of comparable sales declines. It also exceeded
expectations for a 1.8% decline in comparable
sales. The stock jumped 9.09 (4%).
Lowe’s beats Wall Street expectations as it starts to break out of sales slum
General Motors (GM) is raising its quarterly div & initiating a new $6B share
repurchase program as the company attempts to reward investors amid
slowing industry sales & profits. GM announced it is increasing its quarterly div 25% to 15¢ per share, matching that of crosstown rival Ford (F). The higher div is expected to take effect with the company's next planned payout, scheduled to be announced in Apr. Under the $6B repurchase plan, $2B in buybacks are expected to be completed during the 2nd qtr. “The
GM team’s execution continues to be strong across all three pillars of
our capital allocation strategy, which are to reinvest in the business
for profitable growth, maintain a strong investment grade balance sheet,
and return capital to our shareholders,” said CEO Mary Barra. Barra last month suggested the company would continue to return capital to shareholders
this year, pending board approval. The automaker has announced $16B in stock buyback programs since 2023 that have resulted in the retiring of more than 400K shares outstanding. Despite such actions & reporting strong quarterly results, including regularly outperforming expectations, shares of GM are down more than 12% this year. The stock rose 2.46.
GM raises quarterly dividend, initiates $6 billion stock buyback
Tech stocks led the US indices higher, eyeing a comeback investors for Nvidia's (NVDA) crucial earnings & assessed the prospects for Pres Trump's deep tax cuts. Investors are looking to potentially lift stocks more broadly, given the AI bellwether's history of bullish reactions to earnings. But its stock has lagged the stock market so far this year, & the chipmaker's prospects face headwinds from Trump's tariff threats & export controls.
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