#PreMarket Primer: Thursday, August 14: Investors Are Unfazed By Weak Retail Sales
Investors shrugged off weaker-than-expected retail sales on Wednesday, as most believe that the nation’s robust economic growth will help boost spending activity in the future.
The Commerce Department said the nation’s core retail sales increased just 0.1 percent in July, the lowest reading since January. Despite that, investors remained positive on the hopes that job growth will continue and in turn boost consumer spending.
In other news around the markets:
- GDP figures out on Thursday from the eurozone were gloomy, as expected, setting expectations for the bloc’s report as a whole quite low. France posted no growth from the first to the second quarter while Germany, the bloc’s steam engine, announced a 0.2 percent contraction. The figures suggest that the eurozone’s economy will have grown just 0.1 percent on the quarter.
- After reviewing Iliad SA’s $15 billion acquisition offer, T-Mobile CEO Braxton Carter rejected the proposal, saying it was “inadequate.” However, Braxton didn’t close the door on negotiations. Instead, he hinted that T-Mobile might be open to the idea if the price is right.
- Following the release of disappointing second quarter earnings, Cisco Systems announced that it was planning to cut eight percent of its workforce, or 6,000 employees, in the coming months. This will be the company’s second round of mass layoffs in as many years; last year, it reduced its workforce by five percent by eliminating 4,000 workers.
- After a U.S. military assessment team visited Mount Sinjar in Northern Iraq on Wednesday, the Pentagon released a statement saying there were far less people trapped than originally expected, and that they were in a more stable condition than U.S. officials had thought. With the situation on Mount Sinjar looking less dire, a U.S. rescue mission is much less likely as the White House is reluctant to send in more ground troops.
Asian markets were mixed; the NIKKEI was up 0.66 percent but the Shanghai composite and Shenzhen composite were down 0.41 percent and 0.75 percent respectively. The KOSPI rose 0.04 percent, while the Hang Seng index fell 0.37 percent.
European markets began the day on a low note with disappointing GDP data coming in slowly. The FTSE was down 0.15 percent, the STOXX 600 fell 0.26 percent, the CAC 40 lost 0.49 percent and Italy’s MIB was down 0.68 percent.
Energy futures were lower with most believing that the market is currently oversupplied. Brent futures lost 0.46 percent and WTI futures were down 0.43 percent. Gold lost 0.06 percent, but silver was up 0.15 percent, while industrial metals were mostly lower with the exception of copper, which gained 0.06 percent. Aluminum was down 1.15 percent, zinc lost 2.02 percent and tin fell 0.33 percent.
Currency markets were quiet; the euro was steady at $1.3364 and gained 0.04 percent against the pound and 0.09 percent against the yen. The dollar rose 0.10 percent against the yen and 0.04 percent against the pound, but lost 0.02 percent against the franc.
Notable earnings released on Wednesday included:
- Cisco Systems (NASDAQ: CSCO) reported fourth quarter EPS of $0.55 on revenue of $12.40 billion, compared to last year’s EPS of $0.52 on revenue of $12.42 billion.
- Deere & Company (NYSE: DE) reported third quarter EPS of $2.33 on revenue of $8.72 billion, compared to last year’s EPS of $2.56 on revenue of $9.32 billion.
- Macy’s (NYSE: M) reported second quarter EPS of $0.80 on revenue of $6.27 billion, compared to last year’s EPS of $0.72 on revenue of $6.07 billion.
- Pinnacle Foods (NYSE: PF) reported second quarter EPS of $0.33 on revenue of $617.80 million, compared to last year’s EPS of $0.29 on revenue of $569.04 million.
Stocks moving in the Premarket included:
- United Technologies (NYSE: UTX) gained 1.27 percent in premarket trade after rising 1.71 percent over the past week.
- Whole Foods Market (NASDAQ: WFM) was up 0.76 percent in premarket trade after losing 1.38 percent over the past five days.
- Celgene (NASDAQ: CELG) was up 0.67 percent in premarket trade after rising 2.27 percent on Wednesday.
- Freeport-McMoRan (NYSE: FCX) was down 0.66 percent in premarket trade after losing 1.33 percent on Wednesday.
Notable earnings releases expected on Thursday include:
- Wal-Mart Stores (NYSE: WMT) is expected to report second quarter EPS of $1.21 on revenue of $118.98 billion, compared to last year’s EPS of $1.24 on revenue of $116.94 billion.
- Kohl’s (NYSE: KSS) is expected to report second quarter EPS of $1.07 on revenue of $4.28 billion, compared to last year’s EPS of $1.04 on revenue of $4.29 billion.
- Nordstrom (NYSE: JWN) is expected to report second quarter EPS of $0.95 on revenue of $3.39 billion, compared to last year’s EPS of $0.93 on revenue of $3.20 billion.
- J.C. Penney Company (NYSE: JCP) is expected to report a second quarter loss of $0.93 on revenue of $2.78 billion, compared to last year’s loss of $2.20 on revenue of $2.66 billion.
Eurozone GDP data will be the star of Thursday’s economic calendar as investors look for any indication that the bloc’s struggles are at an end. The US will also put out several important economic indicators including consumer confidence, export prices and initial and continuing jobless claims.
For a recap of Wednesday’s market action, click here.
Tune into Benzinga’s pre-market info show with Fari Hamzei, Dave Landry & JC Parets here.
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