Market Wrap-Up for Aug. 22 (NDAQ, HPQ, LTD, ANF, more)
A number of better-than-expected reports of both domestic and global economic data caused a bit of bullish sentiment in the markets this morning. After about a week of mostly losses, stocks finally reversed course today and settled into positive ground by the close.
However, despite the first rise in all of the major indices since last week, the main focus during afternoon trading toda was a technical glitch that caused a three hour delay in trading on the NASDAQ. There are few details on why the halt in trading occurred, but the development caused shares of NASDAQ OMX Group (NDAQ) to plummet once trading resumed.
Nonetheless, the overall bullish sentiment across the markets today occurred despite a number of disappointing earnings from high profile companies. Hewlett-Packard (HPQ), L Brands (LTD), Abercrombie & Fitch (ANF), and Buckle (BKE) were all deep in the red after disappointing investors and traders. However, shares of GameStop (GME) and Toro Company (TTC) rallied after beating analysts’ earnings expectations.
Microsoft (MSFT), Lowe’s Corp (LOW), Sempra Energy (SRE), Precision Castparts Corp. (PCP), and Best Buy (BBY) extended gains today due to Wall Street analyst upgrades. In contrast, Staples (SPLS) and Target (TGT) were lower due to negative analyst moves.
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It’s Been Rough for Retailers
Retailers have been struggling as of late. Quarterly earnings from Wal-Mart (WMT), Target (TGT), Macy’s (M), Coach (COH), Nordstrom (JWN), and a number of others have more-or-less disappointed investors. Don’t get me wrong, there have been some bright spots, like TJX Companies (TJX) and Family Dollar (FDO), but these companies seem to have been the exceptions, not the rule. It just seems that from the low-end to the high-end of the retailer market it has not been an optimistic environment, which could spell a bit of trouble for the economy.
This weakness in the retail space worries me because it reinforces the notion that consumers are continuing to struggle, despite reports of rising consumer confidence and an improving job market. The labor market is just not recovering at an adequate pace, as new job openings for most Americans are few and far between, and wages continue to be suppressed by the weak job market. It doesn’t seem like there is any change on the horizon. Without a healthy and stable workforce bringing home reasonable paychecks each week, the country’s consumer demand will continue to be weak. Weak aggregate demand means that customers are few and far between, especially for retailers. Customers on a budget equals weak sales, which equals weak earnings. It ends up being a vicious cycle as companies cut jobs to lower costs and boost margins, thus suppressing the job market even further.
The recent performance from retailers could be a sign of things to come, or just a blip on the economic recovery radar. Only time will tell.
Thanks for reading. Be sure to check us out on Twitter @dividenddotcom. We will see you tomorrow!
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