Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


While you were sleeping: US retailers disappoint

While you were sleeping: US retailers disappoint

May 21 (BusinessDesk) – Wall Street fell as US retailers including Staples reported earnings that underpinned concern about the pace of growth in corporate profits.

With about an hour of trading left in the day in New York, the Dow Jones Industrial Average shed 0.67 percent, the Standard & Poor’s 500 Index fell 0.58 percent, while the Nasdaq Composite Index dropped 0.60 percent.

Slides in shares of Caterpillar, down 2.5 percent, and AT&T, down 1.9 percent, led the Dow lower. Bucking the trend were shares of Home Depot, up 2.5 percent for the largest percentage gain in the Dow, after the company said May sales were “robust”.

Not all were encouraged by Home Depot’s sales amid concern, shared by US Federal Reserve Chairman Janet Yellen, about the strength of the recovery of the American housing market.

"We remain neutral as we worry that a weaker housing market will impact sales as the year progresses," Janney Capital Markets analyst David Strasser wrote in a note, Reuters reported.

Federal Reserve Bank of New York President William Dudley said that the industry is facing “several significant headwinds.”

“On the housing side, residential investment has stalled out over the past few quarters. Although I expected some slowing due to the rise in mortgage rates in the middle of 2013, the extent of the slowdown has surprised me given that the recent pace of housing starts—roughly 1 million per year—is far below what is consistent with the economy’s underlying demographic trends,” Dudley said in remarks for the New York Association for Business Economics.

“I think housing has been weaker than anticipated because several significant headwinds persist for this sector,” Dudley said.

Meanwhile, several US retailers disappointed on the earnings front.

Shares of Staples sank, last down 13 percent, after the company forecast quarterly earnings that fell short of expectations and posted a drop in its latest quarter profit.

“We’re making progress meeting the changing needs of our customers as we reinvent Staples,” Ron Sargent, Staples’ chairman and chief executive officer, said in a statement. “Despite a slow start to the first quarter, our results were in line with our expectations and we expect to build momentum throughout 2014.”

Shares of retailers Dick’s Sporting Goods, TJX Companies and Urban Outfitters also sank, down 17.2 percent, 6.8 percent and 7.7 percent respectively, after reporting earnings that failed to meet the mark.

“What we’re seeing is a re-assessment of the growth prospects of earnings,” Brad McMillan, the chief investment officer for Commonwealth Financial Network, told Bloomberg News. “It’s not a question of ‘are we going to grow?’ Because we are. It’s ‘are we going to grow as fast as we thought we would?’”

Indeed, Dudley on Tuesday said that the pace of interest rate rises will be “relatively slow,” adding that “this depends, however, in large part, not only on the economy’s performance, but also on how financial conditions respond to tightening.”

In Europe, the Stoxx 600 Index ended the day edging lower to a close of 338.32. Germany’s DAX fell 0.2 percent, France’s CAC 40 slid 0.4 percent, while the UK’s FTSE 100 dropped 0.6 percent. Shares of Vodafone sank 5.5 percent after the company predicted a decline in profit this year.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Interest Rates: RBNZ Hikes OCR To 3.5%, ‘Period Of Assessment’ Now Needed

Reserve Bank governor Graeme Wheeler raised the official cash rate as expected, while signalling a pause in rate hikes to assess the impact of moves so far this year. The kiwi dollar sank after Wheeler said its strength was “unjustified” and that the currency could have “a significant fall.” More>>

ALSO:

Fonterra: Canpac Site 'Resize' To Focus More On Paediatrics

Fonterra is looking at realigning its packing operations at Canpac, in the Waikato, to focus more on paediatric nutritionals... The proposed changes could mean around 110 roles may not be required at the site which currently employs 330. More>>

ALSO:

Scoop Business: Postie Plus Brand Gets 2nd Chance With Well-Funded Pepkor

The Postie Plus brand is getting a new lease of life after South Africa’s Pepkor bought the failed retailer’s assets out of administration and said it will use its purchasing power to reduce costs of stock and fatten margins. More>>

ALSO:

Warming: Warming Signs From State Of Climate Report

Climate data from air, land, sea and ice in 2013 'reflect trends of a warming planet' -- says the latest State of the Climate report, launched by U.S. and New Zealand scientists. More>>

ALSO:

Scoop Business: Embrace Falling Home Affordability, Says NZIER

Despair over the inability to afford a house is misplaced and should be embraced as an opportunity to invest in more wealth-creating activity, says the principal economist at the New Zealand Institute of Economic Research, Shamubeel Eaqub. More>>

Productivity Commission: NZ Regulation Not Keeping Pace

New Zealand regulators often have to work with out-of-date legislation, quality checks are under strain, and regulatory workers need better training and development. More>>

ALSO:

Callaghan Innovation: Investment To Help Deepen Innovation Reporting

Callaghan Innovation, the government’s high tech HQ for Kiwi business, is to help deepen New Zealand media coverage of the commercialisation of innovation through an arms-length partnership with independent business news service BusinessDesk. More>>

ALSO:

Tax Credits, Grants: Greens $1Bn R&D Plan

In the Party’s headline economic announcement, the Greens have launched their plan to build a smarter, more innovative economy which has as its centrepiece an additional $1 billion of government investment in research and development (R&D) above current spend, including tax breaks for business. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news