4:16pm: Retail stocks make 'bullish case,' says 50 Park Investments CEO
The Dow closed Tuesday up 240 points, 0.7%, at 34, 152, the Nasdaq Composite dropped 26 points, 0.2%, to 13,103 and the S&P 500 added 8 points, 0.2%, to end at 4,305.
The retail sector made gains, led by Walmart Inc (NYSE:WMT) and The Home Depot Inc, shares of which 5% and 4%, respectively, after reporting earnings. Target Corporation (NYSE:TGT) gained more than 4% in anticipation of its own earnings after the closing bell on Wednesday, while Lowe's Companies Inc stock improved nearly 3% ahead of its own report.
“We still have a lot of retail stocks that are going to report,” said Adam Sarhan, founder and CEO at 50 Park Investments, as reported by CNBC. “But by and large, if at the end of the week, we’re still up and we’re up nicely, and those retailers don’t give back those gains they’re enjoying today, that’s going to be strengthening the bullish case.”
12.05pm: Walmart, Home Depot beat expectations
The major US indices saw Walmart and Home Depot help lift the Dow for the fifth day, after the nation's large retailers reported strong second quarter results.
At midday, the Dow Jones Industrial Average was up 0.8% to 34,178, the S&P 500 was up by 0.3% at 4,309, but the Nasdaq Composite was down by 0.05% at 13,122.
Michael Hewson, chief market analyst at CMC Markets UK, noted Home Depot’s 2Q earnings were a pretty solid set of numbers, and Walmart’s 2Q numbers easily beat analyst expectations.
“(Home Depot) revenue came in at US$43.79 billion as same store sales rose by 5.8%, and profits came in at US$5.05 a share. While revenues were better than expected total transaction volumes slid back to 467.4 million even as average ticket values rose to $90.”
Hewson noted that, despite upbeat numbers and with the full year outlook affirmed, Home Depot shares have slipped back, over concerns over falling customer numbers, and higher than expected inventory levels.
Hewson also expected Walmart’s 2Q numbers to be strong.
“As a strategy in managing expectations, it appears to have worked with the US retailer reporting 2Q revenues of US$152.86 billion, and profits of US$1.77 a share. The retailer maintained its outlook for the second half of the year, while improving its full year guidance for EPS to a decline of 9 to 11% from 11 to 13%. For 3Q, Walmart said it expects to see revenues of $147.55 billion and profits of $1.31 a share on slightly lower operating margins of 3.6%.”
Walmart announced it is set to make Paramount+ available to its Walmart+ subscribers from September to further take the fight to Amazon in the battle for annual or monthly subscription services, according to Hewson.
At midday, the major movers included Walmart, up by 6.2% on its 20% second-quarter net income rise, while Illumina was up by 9.6% and Ross Stores (NASDAQ:ROST) was up by 3.4%.
On the downside, Halliburton was off 3.8%, Moderna shed 4.2% and Salesforce was down 0.2%.
11.45am: Proactive North America headlines:
Analysts at Noble Capital reiterate 'Outperform' rating and $5 price target on Genprex
Montero Mining and Exploration provides exploration update on its Avispa copper-molybdenum project in Chile
TNR Gold pleased by encouraging copper intercepts at Los Azules project owned by McEwen Copper
Great Atlantic Resources discovers high-grade antimony sample at its Glenelg property in New Brunswick
SinglePoint brings in record $4.5M revenue in 2Q fueled by Boston Solar acquisition
MySize posts huge 2Q revenue jump; reiterates 2022 revenue guidance of at least $5M
Kootenay Silver welcomes latest drill assays from Columba silver project in Chihuahua state, Mexico
PyroGenesis Canada posts 2Q revenue of $5.8M; current backlog and awarded contracts of $35.3M
HealthLynked (OTCQB:HLYK) says 2Q revenue rose 3% from 1Q
FDCTech (OTCQB:FDCT) reports 1,985% leap in six-month revenue reflecting the continued successful integration of its wealth management business
Delta 9 Cannabis posts 2Q revenue growth; acquires three retail cannabis stores in Manitoba
Royal Helium finds “significant” helium shows as Val Marie-1 exploration well in Saskatchewan hits 2,596m total depth
Westwater Resources is on track to become the first US producer of natural graphite for lithium-ion batteries and energy storage
PlantX sees July gross revenue reach $1.2M as Little West cold-pressed juices drive sales
Deepspatial receives revenue-generating contract from a leading fast-moving consumer goods company in South Asia
Tartisan Nickel commences second phase of environmental baseline studies at Kenbridge nickel project in Ontario
Fabled Copper announces additional results from 2021 surface fieldwork on Muskwa Copper Project
Vicinity Motor announces distribution agreement with TOK Group for VMC 1200 Class 3 electric trucks
Magna Mining unveils 'transformational' acquisition of Loncan, which includes Denison project
Genprex announces US patent for REQORSA Immunogene Therapy in combination with immune checkpoint inhibitors to treat cancers
VolitionRx (NYSE-A:VNRX) adds marketing executive Mickie Henshall to its board of directors
Fobi AI (TSX-V:FOBI, OTCQB:FOBIF) enters into Qples by Fobi reseller agreement with leading media platform ShopperBridge
Revive Therapeutics says to amend study protocol for Bucillamine trial for resubmission to US FDA
Plurilock Security included as sample vendor in Gartner Hype Cycle for Digital Identity; closes first tranche of private placement
American Manganese hails increase in processing capacity in leaching stage tests at recycling demonstration plant
Emmaus Life Sciences reports Q2 2022 net revenue of $4.3M after sales of Endari sickle cell disease treatment to United Arab Emirates
Planet 13 Holdings says 2Q revenue rose significantly from previous quarter
Kidoz reports strong 2Q growth; reiterates full-year revenue guidance of $19M-$21M
Alkaline Fuel Cell Power advances C$2.2 million combined heat and power (CHP) project for condo in Toronto
KULR Technology says it is ‘encouraged by momentum’ as it reports Q2 results
Recruiter.com posts sharp revenue rise in second quarter of 2022
Pure Gold Mining continues in bid to lift output and lower costs as it posts second quarter results
Burcon NutraScience reports first quarter sales of C$2.3M
Avicanna highlights 101% year-on-year increase in revenue for the six months to June 30, 2022
Vox Royalty (TSX-V:VOX) posts results for second quarter ended June 30, 2022, showing back-to-back record quarterly revenue growth
Steppe Gold reports financial results for the three months ended June 30, 2022, issues July production update
Plurilock Security closes first tranche of previously announced non-brokered private placement for aggregate gross proceeds of $1.245M
9.35am: Housing starts plunge
US stocks opened mixed as cautious trading prevailed ahead of key retail sales data due Wednesday.
Just after the open, the Dow Jones Industrial Average had added 33 points at 33,945 points.
On the flip side, the S&P 500 was down 6 points at 4,291 points and the Nasdaq Composite was down 28 points at 13,099 points.
Shares of Walmart Inc (NYSE:WMT) were up about 5% after the retailer posted a 2Q earnings beat, with sales growing 8%.
Meanwhile, housing starts plummeted in July, down 9.6% to 1.446 million, far below the analyst consensus expectation of 1.527 million.
Building permits also fell 1.3% to 1.674 million, above the analyst expectation of 1.640 million.
Pantheon Macroeconomics chief economist Ian Shepherdson said the bigger picture here was that homebuilders were responding to a steep drop in demand.
“The downward trend in construction activity will continue for some time yet, given that it lags sales, which lag mortgage applications, which are down 30% from their December peak and still falling,” he said.
“Homebuilders now have far too much inventory, and prices are under pressure. They also face increasing competition from private sellers of existing homes, who are now starting to flood the market after a year on the sidelines, watching prices rise rapidly. We think housing construction will fall across the whole of the second half, hitting bottom in early 2023.”
6.30am: Optimism wanes
US stocks were expected to open lower on Tuesday with the focus falling on retail sector indicators which will show how consumer spending and demand are faring amid rises in interest rates and elevated inflation.
Key retailers, among them Walmart, are due to release quarterly earnings today while US retail sales data for July are due on Wednesday.
Futures for the Dow Jones Industrial Average were trading 0.1% lower pre-market, while those for the broader S&P 500 index were down 0.2%, and contracts for the tech-laden Nasdaq-100 also lost 0.2%.
Recently, softer inflation data have helped equities, with investors betting that US rate-setters will scale back on interest rate hikes but they are also concerned that global economic activity is waning and that key economies may slip into a recession.
“Given the challenge ahead for the global economy there is an expectation that the US Federal Reserve, in the face of the slowdown, will turn down the dial on interest rate rises,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
“Speculation has risen that inflation might have peaked given the pace of price increases eased in July. That has helped lift sentiment towards growth stocks and helps explain why the S&P 500 has been on a winning streak, given that a lower interest rate environment would boost the value of future earnings. Hope is growing that the US may avoid recession, but big risks remain and inflation is still a wild threat yet to be tamed," Streeter said.
Minutes from the US Federal Reserve's last rate-setting meeting are also due on Wednesday and will be scrutinized for direction on future monetary policy.
Elsewhere, oil prices were lower amid fears that softer economic data in China is a sign that global energy demand will weaken.
WTI benchmark crude futures were down 0.5% at $88.97 a barrel while Brent crude futures were down 0.9% at $94.24.
Contact the author at jon.hopkins@proactiveinvestors.com