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

 

Housing: Affordability Drops 14%, Driven By Auckland Prices

Housing affordability across New Zealand fell 14 percent in the year ending November 2014, with Auckland’s lack of affordability set to reach levels it hit during the height of the global financial crisis, according to the latest Massey University Home Affordability Report More>>

ALSO:

The Dry: Fonterra Drops Forecast Milk Volumes By 3.3 Percent

Fonterra Cooperative Group, the worlds largest dairy exporter, reduced its milk volume forecast for the 2014-2015 season by 3.3 per cent due to the impact of dry weather on production in recent weeks. More>>

ALSO:

Strike: Lyttelton Port Workers Vote To Escalate Dispute

Members of the Rail and Maritime Transport Union (RMTU) at Lyttelton Port today voted to escalate their industrial action. Around 200 RMTU members have been operating an overtime ban since 17 December and today they endorsed a series of full withdrawals of labour at the port. More>>

ALSO:

Scoop Business: NZ Dollar Falls To 3-Year Low As Investors Favour Greenback

The New Zealand dollar fell to its lowest in more than three years as investors sold euro and bought US dollars, weakening other currencies against the greenback. More>>

ALSO:

Scoop Business: NZ Govt Operating Deficit Smaller Than Expected

The New Zealand’s government’s operating deficit was smaller than expected in the first five months of the financial year as a clampdown on expenditure managed to offset a shortfall in the tax-take from last month’s forecast. More>>

ALSO:

0.8 Percent Annually:
NZ Inflation Falls Below RBNZ's Target

New Zealand's annual pace of inflation slowed to below the Reserve Bank's target band in the final three months of the year, giving governor Graeme Wheeler more room to keep the benchmark interest rate lower for longer.More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

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