What's moving markets today: May 21, 2019
America's department stores had a brutal start to 2019.
Nordstrom's (JWN) total sales during its first quarter fell 3.5% from the same period a year ago, the company reported Tuesday. In prepared remarks, Nordstrom's CEO blamed the sales drop on "executional misses" with customers.
The retailer also trimmed its guidance. Instead of up to 2% sales growth this year, Nordstrom now expects revenue to decline up to 2%.
Nordstrom's stock dropped 9% during after-hours trading.
JCPenney said Tuesday that sales at stores open at least a year dropped 5.5% during its first quarter compared with a year ago, while Kohl's reported a 3.4% sales decline during the quarter.
JCPenney's stock closed down 7% Tuesday, while shares of Kohl's lost 12%.
Tech stocks carried Wall Street to a solid rebound on Tuesday.
Tech stocks rebounded after tumbling on Monday, when the Trump administration announced plans to loosen some restrictions placed on China’s Huawei.
Retail stocks, on the other hand, fell sharply on the latest dismal earnings reports. Kohl’s (KSS) plunged 12% after slashing its guidance, while JCPenney (JCP) declined 8% after posting a loss and a drop in sales.
Beyond Meat (BYND) is having rare (get it?) day: It closed down nearly 10% following an explosive start on the public market.
Our Paul R. La Monica notes that there isn't too much negative news that should hurt the stock. However there is one bearish prediction from a small analyst:
The British pound briefly spiked on Tuesday after UK Prime Minister Theresa May unveiled details of her final bid to get a Brexit deal through the UK parliament.
Her new pitch would let members of parliament vote on whether to hold a second referendum.
Sterling jumped more than 0.8% against the US dollar on the news. It reached almost $1.28 before falling off again toward the $1.27 level.
The pound started the month around $1.30. It has dropped since then as uncertainty over Brexit has dragged on, dipping as low as $1.268 on Tuesday.
Problems remain: Despite May's new plan, the pound still faces selling pressure.
May faces an "uphill battle" to get members of Parliament to vote for her agreement, even with new concessions, Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said in a note Tuesday:
In addition, the looming Conservative party leadership contest will lead to months of uncertainty and will probably result in a new PM who will be prepared to choose a no-deal Brexit, if a new round of negotiations with the EU do not go their way."
Markets are in positive territory, as investors continue to breathe a sigh of relief following the US government easing some restrictions placed on Huawei.
Economists at Bank of America Merrill Lynch (BAC) are warning that a "protracted trade war could have a meaningful impact on consumer spending."
The firm wrote in a new note that US consumers have reacted negatively to the escalation in the trade war.
Consumer confidence has deteriorated and economists say they've seen consumers pull back on spending since the beginning of the year.
For example, when economists asked people if they had reduced or delayed spending at beginning of 2019, nearly half "reported some pull-back, with lower income households citing the government shutdown as the primary reason and upper income households noting the stock market selloff."
TJX (TJX) reported earnings that topped Wall Street's forecasts and also boosted its outlook for the full fiscal year. The company said that US same-store sales for its top two bargain chains (which it collectively dubs Marmaxx) rose a solid 6% in the quarter. Comp sales at its HomeGoods unit were up slightly too.
CEO Ernie Herrman boasted in the earnings release that sales of apparel and home furnishing categories "were both very strong," and that the company reported a jump in traffic at all its divisions. He added that the company is in "an excellent position."