Morning Minutes

Stocks Slump Amid Mixed Earnings From Retailers

Business people videocalling and taking notes during meeting
Business people videocalling and taking notes during meeting



US markets appear to be heading for a lower open today with Dow futures down 0.3% and NASDAQ futures down 0.7% coming off a mixed Wednesday that saw the Dow finish up 0.3% and the NASDAQ retreat 0.6%. Overseas markets were mixed overnight. Decliners were led by drops of 1.2% for the Hang Seng and 0.6% for the FTSE, while gainers were led by upward moves of 0.5% for Shanghai and 0.2% for the Dax.

Earnings season for retailers kicks off today with mixed results. Walmart, the world’s largest retailer, posted disappointing results, suggesting that the strong January for US retail sales reported yesterday may not have been enough to offset November-December weakness. Walmart disappointed on earnings ($1.39 vs street $1.50), but beat the street on same store sales (8.6% vs street 5.8%). Online sales increased by 69% from a year earlier. The shares are down 4.5% in premarket trading today after management indicated it expects sales growth to slow and earning per share to decline slightly in the coming year.  

On the other hand, Canadian Tire* handily beat earnings per share expectations ($8.40 vs street $6.69 and year ago $5.53). Sales were up 12.8% across the whole company, driven by a gain of 142% in online sales, plus same store sales gains of 9.5% at Canadian Tire stores and 7.6% at Marks Work Wearhouse, offset by a 3.0% decline at Sport Chek stores.

Energy commodities are mixed today and could be active as weekly inventory reports indicate the impact of recent cold temperatures and winter storms on supply and demand. WTI crude oil is up 0.6% this morning after API reported a larger drawdown in its weekly oil inventory report last night. (-5.8 mmbbls vs previous -3.5 mmbbls). Gasoline is up 0.8% today while natural gas is down 0.2%. More inventory reports are due between 11:00 am and noon EST today with both DOE oil (street -2.4 mmbbls vs previous -6.6 mmbbls) and EIA natural gas (street -252 BCF vs previous -171 BCF) expected to show significant decreases in stockpiles.

In other US economic news this morning, initial jobless claims were worse than expected (861K vs street 765K), housing starts fell short of expectations (1.58M vs street 1.65M), but the Philadelphia Fed Manufacturing was not as bad as the street had feared (23.1 vs street 20.0 and previous 26.5).  

*Shares of Canadian Tire are held in some portfolios managed by SIA Wealth Management.

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Colin Cieszynski, Chief Market Strategist

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

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