What's moving markets today
Wall Street's economic jitters returned thanks to Thursday's horrible retail sales report.
Stocks were on track to open higher on optimism about US-China trade talks but the rally was short-circuited by new numbers showing December retail sales unexpectedly tumbled.
Coca-Cola (KO) tumbled 7% after the beverage giant posted a decline in fourth-quarter sales and issued a disappointing outlook for 2019. Cisco (CSCO) jumped 3% after ramping up its buyback program by $15 billion and posting better-than-expected results.
The selloff erases just a chunk of the stock market's recent surge. In fact, the S&P 500's 9.7% gain through the first 30 trading days of 2019 marked the best start to a year since 1991 and eighth best ever, according to Bespoke Investment Group.
Consumers were unexpectedly timid in December, according to numbers released Thursday by the Census Department. It's a potentially troubling indication of where the economy might be headed, and will be a drag on gross domestic product for the fourth quarter.
Retail sales fell 1.2% from November. That surprised analysts, who had forecast the number to grow instead. Still, Wall Street expects the drop to be an outlier, given the unusual stock market volatility in December and the government shutdown toward the end of the month.
These data are so wild that we have to expect hefty upward revisions, but if they stand, they are very unlikely to be representative of the trend over the next few months," wrote Pantheon Macroeconomics' Ian Shepherdson in a note to clients. "The consumer is no longer enjoying tax cuts or falling gas prices, but that’s no reason to expect a rollover."
The decline was concentrated in department stores as well as non-store sales — or e-commerce — which dropped 3.9% compared to the previous month.
Even so, e-commerce rose nearly 10% for the entire year compared to 2017. Sporting goods, hobby, musical instrument and book stores dropped almost 6%.
The numbers were delayed by the shutdown, when the Census Department was unable to collect data.
A strong showing from Outback Steakhouse has boosted shares of its parent company, Bloomin' Brands (BLMN), nearly 7% higher.
The company's fourth-quarter earnings beat analysts' expectations, helped by a 4% increase in same-store sales at Outback for 2018.
Bloomin' Brands said in a release that this marks the Aussie-themed steak chain's "eighth consecutive quarter of strong sales performance."
The company's stock is up 15% this year.
People can't seem to get enough of Coca-Cola Zero Sugar.
The beverage company said in an earnings release Thursday that its growth in 2018 was led by the no-sugar beverage.
That's not surprising: Quarter after quarter, Zero Sugar has led the way for the company.
Coca-Cola (KO) has been expanding its offerings as consumers shy away from sugary sodas. It's been focusing on lower-calorie and lower-sugar drinks in particular.
Last year, the company agreed to buy UK-based Costa Coffee (it finalized the sale last month). It also took a stake in the energy drink BodyArmor to compete with Pepsi's Gatorade. And Coca-Cola is thinking about developing an energy drink itself.
Meanwhile, sales of its more traditional beverages have lagged. In North America, juice, dairy, plant-based beverages and tea all declined by volume in the last three months of 2018.
Overall, the company's sales declined 6% to $7.1 billion for the last three quarters of 2018, and fell 10% to $31.9 billion for the year. Coca-Cola blamed the decline on costs related to refranchising its bottling system, among other things.
Shares of the company were down roughly 4% before the bell after its outlook for 2019 fell short of expectations.
Sales are up, but shares of the trendy jacket company are down 8% despite beating analysts' estimates. It released its third-quarter earnings report earlier this morning.
- Revenue shot up 50% compared to the same period a year earlier.
- The company's emphasis on selling directly to shoppers via its new stores and website helped increase profit by 64%.
- Canada Goose boosted its full-year guidance.
Perhaps today's weak retail sales data is hurting its stock, per our Paul R La Monica:
Shares in Airbus (EADSF) surged 5% after it reported its 2018 earnings and announced that it would stop making the A380, the iconic superjumbo jet that once promised to revolutionize commercial air travel.
The European plane maker will stop delivering A380s in 2021 after its key customer, Dubai-based airline Emirates, slashed its orders for the world's largest airliner.
It's a painful decision," Airbus CEO Tom Enders said during a conference call with analysts. "We've invested a lot of effort, a lot of resources and a lot of sweat into this aircraft."
"But obviously we need to be realistic," he added. "With the decision of Emirates to reduce orders, our order backlog is not sufficient to sustain production."
Shares in Nestle (NSRGF) jumped more than 3% after the Swiss food company said its sales grew 3% in 2018 compared to a year earlier.
The maker of KitKat, Smarties and Nespresso has struggled in recent years to keep up with changing consumer tastes.
But it said Thursday that a shift to growth areas, such as plant-based products, was paying off.
"We saw revived growth in our two largest markets, the United States and China, as well as in our infant nutrition business," CEO Mark Schneider said in a statement.
US stock futures are pointing higher this morning.
We're also keeping an eye on US-China trade news. A third round of high-level talks between US Trade Representative Robert Lighthizer, US Treasury Secretary Steven Mnuchin and China's Vice Premier Liu He is currently underway in Beijing.
The discussions could yield a breakthrough that would prevent higher tariffs on $200 billion of Chinese goods.
Investors around the world have been optimistic about the negotiations so far, especially after President Trump said he would be willing to stretch his March 1 deadline if it appeared that the two sides are getting close to a deal.