Europe’s Troubles Weigh On Stocks, Commodities. (WMT, HD, TJX, SINA, CRIC, LENS)
After starting the day in positive territory, stocks retreated to end solidly in the red as the euro continued to sink, hitting a 4-year low. While it’s a great time to go on vacation to EU nations, Europe’s troubles and the decline of the euro are hurting oil prices and stocks around the globe. We continue to believe the market will remain volatile in the near term with a generally bearish bias, as stocks correct for the first time since their big run-up from the bottom.
The market traded down on the day, with the Dow finishing -115 points lower to 10,511. The S&P lost -16 points to 1,121, while the Nasdaq fell -37 points to 2,317. Oil continued its slide, dropping -67 cents to $69.41 a barrel, while gold dipped -$13.40 to $1,214.30 an ounce.
On the economic front, the Labor Department announced that the producer price index edged down -0.1% last month, slightly better than the -0.2% decline expected by economists. The core rate, which excludes energy and food prices, grew 0.2%. Analysts were expecting a gain of 0.1%. Meanwhile, the Commerce Department said that housing starts climbed 5.8% in March to a seasonally adjusted annual rate of 672,000, higher than the 650,000 consensus. Building permits, meanwhile, dropped -11.5% to a seasonally adjusted annual rate of 606,000, its lowest level in six months.
In earnings news, shares of Wal-Mart (WMT) rose 1.9% after the discount retailer posted Q1 results that topped estimates. For the period ended April 30th, net income was $3.32 billion, or 88 cents per share, compared with $3.02 billion, or 77 cents per share, last year. Revenue grew almost 6% to $99.85 billion, while same-store sales fell for the fourth quarter in a row by -1.1%. Analysts were expecting EPS of 85 cents on revenue of $98.45 billion. For Q2, Wal-Mart guided for EPS of 93-98 cents versus the 98-cent consensus. It forecast same-store sales to be between -2% and 1% at its U.S. namesake stores.
Home improvement chain The Home Depot (HD) reported better-than-expected Q1 earnings and also raised its full-year outlook. For the quarter ended May 2nd, the company earned $725 million, or 43 cents per share, up from $514 million, or 30 cents per share, a year ago. Adjusted EPS was 45 cents, which topped estimates of 40 cents. Sales climbed 4.3% to $16.86 billion, while comparable-store sales increased 4.8%. Looking forward, Home Depot boosted its full-year view to EPS of $1.88 from $1.79. Analysts were expecting EPS of $1.87. The company also guided for sales to increase by 3.5%, up from a prior outlook of 2.5%. Shares of the stock slipped -2.4%.
Shares of The TJX Companies (TJX) tumbled -3.5% on news the company forecast a lower-than-expected FY10 outlook. For Q1, the operator of discount retailer chains such as T.J Maxx and Marshalls posted a profit of $331.4 million, or 80 cents a share, which came in ahead of estimates by two cents. A year earlier, the company earned $209.2 million, or 49 cents a share. Revenue jumped 15% to $5 billion, and same-store sales increased 9%. TJX said it expects EPS of 67-72 cents during Q2, which is in line with the 72-cent consensus, and FY10 EPS of $3.21-$3.32, which is below expectations of $3.35. A total of 44 pro investors counted the stock among their top 15 holdings at the start of Q1, while 164 tickerspy members included the stock in their portfolios.
Chinese internet portal Sina (SINA) saw its shares rise 7.8% after the company posted a 150% surge in its Q1 profit, in part due to a $10 million gain on its stake in real estate information company China Real Estate Information Corporation (CRIC). For the three months ended March 31st, Sina earned $24.4 million, or 37 cents per share, up from $9.7 million, or 17 cents per share, last year. Adjusted EPS was 34 cents, which topped the 27-cent consensus. Revenue rose 15% to $85 million. For Q2, the company forecast revenue of $90-$93 million. A total of eight pro investors counted the stock among their top 15 holdings at the start of Q1, while 224 tickerspy members included the stock in their portfolios.
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