Retailers’ earnings reports are bleak, the market is worried about inflation, US stocks tumbled at the opening, the Dow fell more than 400 points |

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Affected by inflation eroding profits, U.S. retailers have reported poor earnings in the past two days. Among them, Target’s stock price fell by more than 25% in early trading, highlighting investors’ increasing concerns about inflation. U.S. stocks opened sharply on Wednesday (18th). , the Dow Jones Industrial Average fell more than 450 points.

At the time of writing, the Dow Jones Industrial Average fell more than 450 points or nearly 1.46%, the Nasdaq Composite fell nearly 1.8%, the S&P 500 fell more than 1.5%, and the Philadelphia Semiconductor Index fell nearly 1%.

Inflation is weighing on consumers and retailers, as rising costs erode profits, with the latest earnings data from retail giants Walmart and Target being mixed.

MKM analyst Bill Kirk believes that the problem appears to be inflation forcing consumers to spend more on food and less on discretionary goods that are more profitable for retailers, so consumer discretionary retailers will face more pressure than grocery retailers.

The opening slump also appeared to be in response to comments from Federal Reserve Chairman Powell, who said the Fed will keep raising interest rates until it sees inflation falling in a convincing way, before moving forward, saying the Fed is Efforts to bring down the highest U.S. inflation in 40 years could bring some pain.

In Europe, the European Automobile Manufacturers Association (ACEA) released the latest data. Given that supply chain problems still seriously affect car production, new car sales in the EU fell sharply by 20.6% in April. The data is the weakest April on record, excluding the worst period of the epidemic in 2020.

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According to data released by the Office for National Statistics (ONS), the UK consumer price index (CPI) increased by 9% in April, the highest level since the calculation began in 1997, and higher than the 30-year high of 7% set in March. The Bureau of Statistics estimates that this figure is the highest since 1982.

As of 21:00 on Wednesday (18th) Taipei time:
S&P 500 daily chart. (Image source: Juheng.com)
Stocks in focus:

Target Department Store (TGT-US) plunged 25.68% in early trade to $160 per share

Affected by high shipping costs, sharp price cuts and lower-than-expected sales of non-essentials, Target delivered a mixed earnings report, reporting first-quarter revenue of $25.17 billion, beating market expectations of $24.49 billion, adjusted Earnings per share were reported at $2.19, well below the consensus estimate of $3.07. Looking at the overall financial report, like yesterday’s performance of Walmart (WMT-US), it has been eroded by high costs.

Lowe’s (LOW-US) fell 2.10% to $189.95 a share in early trade

Home improvement retailer Lowe’s reported revenue of $23.66 billion last quarter, missing market expectations of $23.76 billion, earnings per share of $3.51, better than expected $3.22, and poor same-store sales , down 4% from the same period last year.

Warby Parker (WRBY-US) fell 7.41% to $16.18 a share in early trade

Eyewear retailer Warby Parker was affected by the new crown epidemic, and its revenue last quarter only increased by 10.3% to 153.2 million US dollars, which was 18% lower than the same period before the epidemic. In addition, the loss in the previous quarter also expanded compared with the same period, from a loss of 3 million US dollars last year. to $33.7 million. However, active sales users increased by 18% year-on-year to 2.23 million, and average revenue per customer also increased by 11.2% over the same period last year to $249.

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Today’s key economic data:
  • The monthly growth rate of building permits in the United States in April was -3.2%, expected -2.4%, and the previous value was 1.2%
  • The total number of building permits in the United States in April reported 1.819 million, expected 1.812 million, and the previous value of 1.879 million
  • The monthly growth rate of U.S. housing starts in April was -0.2%, expected -1.3%, and the previous value was 1.2%
  • The total number of new housing starts in the United States in April reported 1.724 million, expected 1.765 million, and the previous value of 1.728 million
  • U.S. last week (as of 5/13) EIA crude oil inventory changes are expected to be 1.383 million barrels, the previous value of 8.487 million barrels
Wall Street Analysis:

Jane Foley, head of the foreign exchange department of Rabobank, said that Fed Chairman Powell’s speech a few days ago is an important reminder to the market that the Fed will raise interest rates at a very fast pace, on the one hand, to bring the disorderly inflation back under control, on the other hand It also restores the credibility of the Fed; and the Fed’s hawkish stance may be what makes market sentiment look fragile.

Shana Sissel, investment director at Cope Corrales, said of the rally that when stocks fall, investors take the opportunity to get in, and similar volatility occurs. As for the Fed’s stance, she believes it will be difficult for the Fed to achieve a soft landing for the economy.

Salman Ahmed, global head of macro at Fidelity International, said economic growth is expected to start to slow in the coming months, arguing that the Fed’s actions will help to tame inflation and that the next step will be to focus on growth shocks.

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