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What’s moving markets today: May 15, 2019

Analyst: Uber is at beginning of its growth in US
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What’s next for investors on Thursday?

Wednesday trading is over and global markets seem to have calmed down some. Here’s what investors will focus on next.

  • US jobless claims for the week ended May 11, housing starts for April and the Philadelphia Fed Business Outlook Survey are due at 8:30 am ET
  • Walmart (WMT), Baidu (BIDU) and NVIDIA (NVDA) report earnings.
  • The VivaTech conference starts in Paris

Stocks close higher for the second day in a row

Stocks ended the day higher for the second day in a row.

While markets had started the day lower, they turned positive following reports that the United States would delay tariffs on auto imports by six months. Treasury Secretary Steven Mnuchin also said Washington was close to scrapping tariffs on steel imports from Mexico and Canada.

  • The Dow closed 0.5%, or 116 points, higher.
  • The S&P 500 finished 0.6% higher.
  • The Nasdaq closed 1.1% higher.

Visa (V), Microsoft (MSFT) and Pfizer (PFE) were the strongest gainers in the Dow, all closing up more than 1%.

Only five Dow stocks finished the day lower. They were 3M (MMM), Walmart (WMT), JPMorgan (JPM), UnitedHealth (UNH) and Caterpillar (CAT).

In the S&P, all sectors finished the day stronger with the exception of financials. The sector’s decliners were led by Charles Schwab (SCHW) and SVB Financial Group (SIVB), which fell 3.6% and 2.9%, respectively.

Walmart and 3M are the only Dow stocks in the red

With only about half an hour of trading left in the day, only two Dow components are in the red.

Walmart (WMT), which is due for earnings tomorrow, and 3M (MMM) are lower, sliding 0.2% and 0.1%, respectively.

Overstock plunges 15% after CEO sells shares

Overstock is going through a rocky transition, from being a money-losing online retailer to a become a blockchain and cryptocurrency company. Things got worse on Wednesday. Shares of Overstock (OSTK) plunged 15% after a SEC filing revealed that CEO Patrick Byrne sold 500,000 shares of the company in two separate transactions this week.

Overstock posted a net loss of more than $40 million back in March and also announced layoffs. And even though the company is focusing more on its Medici Ventures investing firm for blockchain technology, as well as tZero security tokens for e-commerce and trading, investors are still worried about the problems in its core retail unit.

Simply put, Overstock can’t compete with Amazon (AMZN) and the red hot Wayfair (W), the online home furnishing retailer whose shares have surged 60% this year. The stock sale by Byrne clearly isn’t inspiring confidence either.

Exciting IPOs are coming this year

Uber (UBER), Pinterest (PINS) and Lyft (LYFT) were just the beginning of a stuffed IPO pipeline in 2019.

“We’re very excited about the upcoming Slack IPO,” said David Miller, chief investment officer at Catalyst Funds on Markets Now.

Zoom (ZM) is another recent IPO business that impressed Miller and Catalyst thanks to its gross margins.

Less exciting? The ride-sharing apps.

Uber and Lyft were a very different story, Miller said, citing concerns about their margins. “We’re not excited about ride-sharing.”

Retail is hurting in the trade war

The pain of the trade war between the United States is becoming more obvious.

Tariffs are a looming threat for retailers, which haven’t yet passed on trade-war-related costs to consumers, said CNN Business’ Matt Egan on Markets Now. Passing on costs could help companies’ margins but would weigh on the consumer’s wallet.

Wednesday’s weaker-than-expected retail sales data for April, for example, underlined that problems for America’s retailers are real.

However, some sectors are performing well regardless of the trade spat. Cloud computing was an example of that, said David Miller, chief investment officer at Catalyst Funds on the show.

In any case, it was clear that President Donald Trump was still banking on a deal, which would relieve pressure from sectors like retail and agriculture, Miller said.

But for now, Trump “wants to inflict enough pain on China that they change their behavior,” he said.

Uber is just at the beginning of its growth story

The glory days are still ahead for Uber, Pierre Ferragu, analyst at New Street Research, told CNN’s Zain Asher on Markets Now.

Uber (UBER) IPOed last Friday amid a global selloff in stocks. By Monday’s close – after two days as a public company – Uber was down 17%. Today, the stock is in the green.

On a relative basis, Uber even did quite well in its first few trading days, said Ferragu.

“They’re just at the beginning of their growth story in the US,” said Ferragu, adding that many people aren’t using ride-sharing services yet

Nevertheless, investors are keeping a close eye on Uber’s competitor Lyft (LYFT), which IPOed in March. Its shares are down more than 32% since their debut.

MSG Networks clanks as Knicks lose Zion lottery

Long-suffering Knicks fans like Spike Lee (as well as this reporter – a former season ticket holder) have another reason to cry Wednesday. And so do investors in MSG Networks and The Madison Square Garden Company.

The Knicks did not win the NBA draft lottery Tuesday night. They’re getting the third pick. The downtrodden New Orleans Pelicans won the top selection, which means they will almost certainly take Duke phenom Zion Williamson.

Shares of Knicks broadcaster MSG Networks (MSGN) fell 6% while The Madison Square Garden Company (MSG), which owns the team and arena, dipped 1%.

The possibility of adding one of the most heralded rookies in recent memory had given Knicks fans and MSGN/MSG investors some hope that the team’s fortunes can turn around. Now they have to pray that the team might be able to land a top free agent like Warriors star Kevin Durant or disgruntled Boston Celtic Kyrie Irving.

BTIG analyst Brandon Ross said in a report Tuesday that it’s key for the Knicks to add high-profile talent. Ross argues that MSG Networks is currently “a weak product carrying a high price tag” and that “if the Knicks are able to transform into a winner, ratings should follow.” That would mean higher affiliate fees and advertising revenue.

Beyond Meat is surging ... again

Tim Hortons new line of breakfast sandwiches using Beyond Meat.

Beyond Meat (BYND) shares are rallying 11% today.

The surge in its stock comes after the producer of plant-based protein announced a new partnership with Tim Hortons. The Canadian coffee chain said earlier it will begin selling Beyond Meat’s sausage patty as an option in three of its breakfast sandwiches.

Beyond Meat went public earlier this month and is trading 250% above its opening price.

Here are the best and worst stocks of the morning

Ninety minutes into the trading day, the Dow, S&P 500 and Nasdaq all remain in the green.

The Dow is up 35 points. Its strongest gainers are Visa (V), Pfizer (PFE) and Microsoft (MSFT), which are all up more than 1%.

Decliners are led by Walmart (WMT) and United Technologies (UTX), with both down 0.6%.

In the S&P, Coty (COTY) and Take-Two (TTWO) are leading gainers. Take-Two reported earnings yesterday and analysts are bullish and what could be in the company’s future.

Agilent Technologies (A) is the worst performer in the S&P, after its earnings missed expectations.

Today's economic data tells us it's the wrong time for a trade war: economist

Retail sales and industrial production data came in worse-than-expected this morning.

Industrial production has declined in three of the past four months. “It looks like factory production is singing the trade war uncertainty blues,” wrote Chris Rupkey, chief financial economist at MUFG Union Bank.

American companies’ exports may be suffering the consequences of President Donald Trump’s trade war.

The weaker data could also make investors nervous about the outlook for the US economy for the rest of the year after 3.2% first quarter GDP growth. But if consumers aren’t spending and factories are taking it slower, it could be hard for the economy to live up to its first quarter.

The pressure the White House has been putting on the Federal Reserve to cut interest rates and boost the economy could also increase from here.

Macy's CEO warns new tariffs will have an impact

Macy’s CEO Jeff Gennette warned that the Trump administration’s new tariffs on Chinese goods will hit the retailer.

It “does have some impact, particularly on our furniture business,” Gennette said of the administration’s decision to raise tariffs Friday to 25% from 10% on around $200 billion worth of imported goods from China.

But Gennette said the “team anticipates that this can be mitigated.”

If tariffs are placed on all Chinese imports, however, “that will have an impact on both our private and our national brands,” Gennette said.

Macy’s (M) has been working to move its private label product production out of China in recent years. But consumers will likely see prices go up if if tariffs are placed on all Chinese goods.

“It is hard to do the math to find a path that gets you to a place where you don’t have a customer impact,” he said.

Stocks open lower

US stocks opened lower on Tuesday as investors came to grips with worse-than-expected retail sales and industrial production numbers for April.

  • The Dow kicked off 154 points, or 0.6%, lower.
  • The S&P 500 opened down 0.6%.
  • The Nasdaq opened 0.6% lower.

Alibaba (BABA) was in focus after the Chinese e-commerce company reported a 51% revenue jump from a year ago. Its shares climbed 1%.

Back in the US, Macy’s (M) also reported earnings including a small increase in same store sales. Macy’s stock was up 3.2% at the open.

Industrial production data was also worse than expected

The bad data surprises today didn’t stop at retail sales. Industrial production for April, undercut expectations as well.

Analysts had forecast a flat level for month-on-month production. Instead, it dropped 0.5%. Capacity utilization slipped to 77.9% from 78.5% in the same period.

Stock futures extended their losses after the data release.

Stock futures extend losses after retail sales data

Stock futures extended their losses after this morning’s retail sales data, which was worse than expected. Sales in April declined, while they were expected to edge higher.

  • Futures for the Dow, S&P 500 and Nasdaq are all down 0.7%
  • The US dollar, measured by the ICE US Dollar Index, defended its 0.2% gains at 97.668.
  • US 10-year Treasury yields dropped to 2.373%, but 2-year yields dropped to 2.158%, their lowest level since February 2018, according to Refinitiv.

Bad economic news: US retail sales fell in April

American consumers didn’t shop until they dropped in April. And as a result, retail sales…dropped.

The US Census Department reported Wednesday that retail sales fell 0.2% from March. Economists had been expecting a 0.2% increase. Stock market futures fell further following the news.

The decline in retail sales came on the same day that Chinese retail giant Alibaba (BABA) and struggling department store chain Macy’s (M) both reported quarterly results that topped forecasts. But that news may be overshadowed by the broader retail figures.

Sales fell in most major categories last month, according to the government. The steepest drops were at auto dealers, electronics and appliance stores and building materials retailers. Sales even declined in the “nonstore retailer” category, a segment that includes Amazon (AMZN) and other online commerce companies.

The bright spots last month? Grocery stores, department stores, gas stations and restaurants.

Two big pot stocks tumble after posting results

It looks like the business of cannabis, just like any other industry, will have its fair share of winners and losers. Two Canadian marijuana companies reported results after the closing bell Tuesday and their stocks were both lower Wednesday morning.

Tilray (TLRY) fell about 4% despite reporting a smaller than expected loss and a sales surge of nearly 200% that topped forecasts. Aurora Cannabis (ACB) tumbled about 3% after the Nelson Peltz-backed company posted a larger loss than forecast and revenue that missed estimates.

Cannabis stocks popped on Tuesday after another firm – medical and recreational marijuana producer CannTrust (CTST) reported an actual profit.

But there is one cause for concern throughout the industry. Even though demand is strong, the average selling prices of cannabis-derived products are heading lower now that recreational cannabis is legal in Canada and several states in America. That trend bears watching. Competition is intense in this still very young market.

Macy's gets off to 'solid start' in 2019

Macy’s (M) topped investors’ forecasts with its first quarter earnings, signaling that the retailer has moved past a difficult holiday stretch.

On Wednesday, Macy’s said sales at stores open at least a year increased 0.7% during the quarter compared with a year earlier. It was Macy’s sixth straight quarter of sales growth at stores open at least a year.

Macy’s has been remodeling older stores with upgraded fixtures and new merchandise. It has also been adding new Macy’s Backstage discount sections to some stores. CEO Jeff Gennette said both strategies lifted sales during the quarter.

Macy’s online sales posted double-digit growth during the quarter, too.

Macy’s is “off to a solid start this year,” Gennette said in a statement. The company reaffirmed its guidance for 2019 and expects sales this year to grow by up to 1%.

The retailer’s stock rose 3% in pre-market trading. Coming into Wednesday, Macy’s stock had fallen 27% this year.

Macy’s stock had its worst day ever in early January after after the company reported sluggish sales for the critical holiday period.

Like other department stores, Macy’s has been trying to reinvent its business for consumers’ changing shopping habits. For now, Macy’s looks like it’s keeping up.

What China slowdown? Alibaba's sales soar

Alibaba co-founder Jack Ma has every reason to be smiling Wednesday – and not just because of the bizarre sex advice he recently gave to newlywed Alibaba employees.

The Chinese e-commerce giant reported earnings and revenue for its fourth quarter and fiscal year that topped forecasts.

The results seem to suggest that the Chinese consumer is not getting hit too hard by the trade spat by the US and China. They just keep spending.

Shares of Alibaba (BABA), which are already up more than 25% in 2019, rose 4% in early trading on the news. Here’s a breakdown of the numbers.

  • Total revenue up 51% from a year ago
  • EBITDA up 29% year-over-year
  • Mobile monthly active users up 22 million from December to 721 million
  • Full-year gross merchandise volume up 19% to $853 billion

And perhaps the best bit of news for Alibaba investors? The company’s giant cloud unit, which competes with Amazon (AMZN), Google-owner Alphabet (GOOGL), Microsoft (MSFT) and IBM (IBM), reported a revenue increase of 76%. Alibaba said customers spent more and the company also added more Chinese companies as Alibaba Cloud clients.

Lloyd Blankfein thinks China has more to lose than the US under Trump's tariff strategy

Former Goldman Sachs CEO Lloyd Blankfein aired his two cents on President Donald Trump’s tariff strategy on Twitter late Tuesday.

“Saying it hurts us misses the point. China relies more on trade and loses more,” he said in a tweet, likening the trade spat between China and the US to a labor strike in which management and workers both get hurt but ultimately need to compromise.

Blankfein ended his term as CEO Goldman in summer last year after more than 12 years on the job.

Christine Romans: Here's why Trump is in 'no hurry' to drop tariffs

Don’t be surprised if stocks remain wobbly. The US trade war with China is nearing its one-year anniversary, and only now are investors taking President Donald Trump seriously on his tariff threat.

The president appears comfortable with his strategy and is in no hurry to drop his tariffs. If anything, more could be coming.

As this realization sinks in, US stock indices have slipped away from record highs. After hitting a record high in April, the S&P 500 has lost 3.8% and the Nasdaq is off 5.2% from its May peak. 

But US stocks markets are still higher than where they were a year ago when the trade war started.

There’s two possibilities on why: Trade hawks say this is because a strong US economy can absorb the trade shocks; but it also could be that investors haven’t fully factored in the trade risk.

The president hates trade deficits and (wrongly) sees them as the US losing money. China accounts for most of the US overall trade deficit and autos represent the biggest chunk of the global goods deficit. Expect more on both fronts.

The US is preparing a list of more than $300 billion in other Chinese imports to tax. And May 18 is the deadline for the president to decide whether to put tariffs on European autos.

Marie Kondo effect boosts Container Store's profits

Perhaps star organizer Marie Kondo can save the retail industry.

Shares of the Container Store (TCS) are rallying 13% in premarket trading after reporting strong fourth-quarter earnings late Tuesday.

Sales leapt nearly 9% for the first three months of 2019 and same-store sales also jumped 8.5%. It also reported a profit of $16 million — a sharp turnaround from the $400,000 loss it posted for the same quarter a year ago.

The company attributed the strong numbers in part to the Netflix’s show’s impact.

CEO Melissa Reiff said the chain has had a “positive impact from the ‘Marie Kondo effect’ that is driving even more interest in our core category of Custom Closets and storage and organization.”

Markets might be starting to stabilize

The trade fears that have gripped Asian markets in recent days appear to be tapering off.

  • Hong Kong’s Hang Seng index rose 0.5% today, while the Shenzhen Composite added 2.4% — helped by talk of new economic stimulus. Japan’s Nikkei index gained almost 0.6%.
  • The picture is less sunny in Europe, where the Stoxx 600 index is down about 0.1%. Britain’s FTSE 100 is up 0.2%. Markets in Germany are lower despite strong first quarter GDP growth.
  • US stock futures are pointing down, too. The Dow is set to drop about 20 points, or 0.1%, when markets open. The S&P 500 is pacing for a similar decline. The Nasdaq could open flat.

Such calm would likely be welcomed after a rough week for US markets, which recovered yesterday from big sell-offs. 

The Dow closed up more than 200 points, or 0.8%, while the S&P 500 was up 0.8%, and the Nasdaq was up 1.1%.

What to expect on retail today

The Census Bureau will release its US retail sales report for April at 8:30 a.m. ET.

Economists surveyed by Refinitiv expect retail sales rose 0.2% last month.

The retail industry is turning into a tale of the haves and the have-nots. While Walmart (WMT), Amazon (AMZN) and Kohl’s (KSS) have adapted well to quickly changing consumer demands, others like JCPenney (JCP) and Sears (SHLDQ) are falling short.

People are still buying stuff, though — they’re just buying in different ways and at different places.

New economic data puts pressure on China

China’s vast economy showed new signs of weakness last month, raising the likelihood of increased government efforts to stimulate growth as its trade war with the US escalates.

Key indicators of economic activity, like industrial output and retail sales, cooled significantly last month, according to government figures released Wednesday.

Chinese industrial output grew 5.4% in April compared to the previous year, significantly lower than the 6.2% to 6.5% analysts had expected.

It was also a sharp dip from last month, when growth came in at 8.5%.

The trade war remains one of the biggest risks to China’s economy, with tariffs expected to hurt economic growth on both sides.

And if tensions continue to escalate, experts say that will only put more pressure on Beijing.

Katrina Ell, an economist at Moody’s Analytics, said: