Morning Minutes

Stocks Keep Climbing as Wal-Mart Beats Earnings Expectations




US index futures are trading flat to up 0.3% this morning, building on yesterday’s 1.2% gains for major US indices. In Europe today, the Dax is up 1.5% while the FTSE is up 0.5%.  Commodity and currency market action is mixed with Natural Gas up 1.0%, Copper down 1.0%, WTI Crude Oil down 0.2% and Gold down 0.5%, trading below $2,000/oz for a second straight day.

Apparent progress in US debt ceiling talks and a willingness on both sides to avoid a default continues to ease fears and spark renewed interest in equities. Stocks also appear to be benefiting from better-than-expected numbers from US retailers.

Walmart not only beat expectations on EPS by a solid margin ($1.47 vs street $1.32, up 1.5% premarket), its same store sales increased by 7.4% from last year and the company raised guidance for this year. Management indicated that sales growth was driven mainly by grocery items offsetting softness in discretionary lines like electronics and clothing.

Other retailers beating the street today include Canada Goose ($0.14 vs street $0.08), up 11.3% premarket), and Bath and Body Works ($0.33 vs street $0.26, up 12.2% premarket). Cisco Systems, on the other hand, is down 4.1% premarket despite positive earnings ($1.00 vs street $0.98).

This morning’s US economic data has also been encouraging as both weekly initial jobless claims (242K vs street 254K), and the Philadelphia Fed Manufacturing Survey (-10.4 vs street -19.8) were not as bad as feared. US existing home sales are due at 10:00 am EDT.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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