Morning Minutes

Target Gets Hammered as Retailer Results Miss The Mark

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Yesterday’s US equity market gains of 1.3% to 2.8% are increasingly looking like another bear market relief rally with index futures steadily sliding overnight and then accelerating downward this morning on more disappointing results out of US retailers. Currently Dow futures are down 0.5% while NASDAQ futures are down 1.1%.

Walmart, which dropped 11.4% yesterday is down another 2.2% in premarket action but that pales in comparison with today’s 24.1% premarket plunge by superstore competitor Target. Target reported earnings far below expectations ($2.19 vs street $3.07), which management blamed on supply chain problems, rising costs and falling sales of discretionary product lines. Despite beating street expectations on earnings ($3.51 vs street $3.22), home improvement retailer Lowes is down 3.8% premarket after reporting a worse than expected decline in same store sales (-4.0% vs street -2.5%).

Despite signs of a softening economy, traded interest rates continue to rise with the US 10-year treasury note yield climbing back up above 3.00% this morning. This move can be attributed to hawkish comments from Fed Chair Powell on the need keep raising interest rates to fight inflation and increasing global inflation pressures seen today in consumer price reports from Canada (6.8% vs street 6.7%) and the UK (9.0% vs previous 7.0%).

Commodity trading is mixed today with energy contracts rising and metals falling. WTI crude oil is up 2.2% while natural gas is up 1.4% but copper is down 0.7%. The US dollar is climbing again today, gaining 0.3% on the Euro, climbing 0.6% against Gold and the Pound, and rising 1.2% against Bitcoin.   

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

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