While you were sleeping: Macy’s cuts profit outlook

Thursday 12th November 2015

Wall Street weakened as a profit downgrade from Macy’s and freshly disappointing data from China weighed on the market.

Shares of US retailers dropped on a bleak earnings report from Macy’s. Shares of Macy’s sank, falling as much as 15 percent, after it posted a larger than expected slump in third-quarter sales and lowered its annual profit estimate. It also said it will not form a real estate investment trust.

“It’s obviously troubling,” Macy’s Chief Executive Officer Terry Lundgren told Bloomberg in an interview. “My sense is, if they [consumers] want to spend, they can. And once they’ve finished buying their cars and finished remodelling their houses, there’s room for them to spend in our categories as time goes on.”

Rivals Kohl’s, Nordstrom and JC Penney will also report earnings this week. Share of Kohl’s dropped 6.4 percent, Nordstrom slid 4 percent, while JC Penney slid 2.7 percent.

In New York trading at about 11.28am, the Dow Jones industrial average retreated 0.18 percent. At about 11.12am trading, the Standard & Poor’s 500 Index declined 0.21 percent while the Nasdaq Composite Index slipped 0.15 percent.

US bond markets were closed for Veterans Day.

In the Dow, slides in shares of Nike and those of Wal-Mart, last each trading 1.7 percent lower, outweighed advances in shares of General Electric and those of McDonald’s, last up 1.2 percent and 0.7 percent respectively.

The latest data from China showed the nation’s industrial output increased a lower than expected 5.6 percent in October from a year earlier. To be sure, retail sales rallied 11 percent.

China’s weakening growth subdued the appeal, and prices, of commodities including zinc and lead.

Oil declined ahead of a report by the Energy Information Administration on Thursday, which is expected to show US crude inventories rose for a seventh week in a row last week, according to a report by industry group American Petroleum Institute and a Reuters poll.

In Europe, the Stoxx 600 Index finished the day with a 0.7 percent increase from the previous close. The UK’s FTSE 100 Index added 0.4 percent, Germany’s DAX Index gained 0.7 percent, while France’s CAC 40 Index rose 0.8 percent.

Better than anticipated earnings including from Carlsberg and Henkel helped lift stocks. Corporate activity also helped, as Anheuser-Busch InBev made a formal offer to buy SABMiller for about US$107 billion. Both stocks closed higher, with SABMiller up 1.9 percent and Anheuser-Busch InBev up 2.1 percent.

Investors are also betting that European Central Bank policy makers will add extra stimulus next month to help stoke the region’s economy. A sliding euro is cementing those expectations.

“Expectations for ECB easing are still high in the market now, so a weaker euro is giving good support for European equities, while better-than-expected earnings improve sentiment,” Allan von Mehren, chief analyst at Danske Bank in Copenhagen, told Bloomberg. “It’s all part of the same equation that’s contributing to quite a good outlook for Europe.”

BusinessDesk.co.nz

Comments from our readers

No comments yet