Stock Market News for May 21, 2014 – Zacks Investment Research
Benchmarks snapped a two-session winning streak and ended in the red on Tuesday due to declines in retail stocks. Disappointing earnings results by Staples, TJX, Dick’s Sporting Goods and Urban Outfitters led the selloffs. Caterpillar’s disappointing sales figures also weighed on the benchmarks. Meanwhile, investors assessed Philadelphia Fed President Charles Plosser’s comments as the day was devoid of any economic data that could move the markets.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article
The Dow Jones Industrial Average (DJI) dropped 0.8% to close Tuesday’s trading session at 16,374.31. The Standard & Poor 500 (S&P 500) declined 0.7% to finish at 1,872.83. The tech-laden Nasdaq Composite Index dropped 0.7% to 4,096.89. The fear-gauge CBOE Volatility Index (VIX) surged 4.4% to settle at 12.96. Total volume for the day was roughly 5.70 billion shares, lower than this month’s average of 5.97 billion. Decliners outpaced advancing stocks on the NYSE. For 69% stocks that declined, 29% advanced.
Selling pressure in retail stocks dragged the benchmarks down on Tuesday. Shares of Staples, Inc.(NASDAQ:SPLS) plummeted 12.6% after the office supply retailer reported dismal first quarter earnings results and forecasted a drop in its current quarter sales figures. Staples’ first-quarter adjusted earnings of 18 cents per share fell short of the Zacks Consensus Estimate of 21 cents per share and decreased 31.0% year over year.
The TJX Companies, Inc. (NYSE:TJX) reported earnings of 64 cents per share in the first quarter of fiscal 2015, missing the Zacks Consensus Estimate of 67 cents by 4.5%. First quarter growth was lower compared to last year, due to tough retail environment in the form of reduced discretionary spending by consumers and unfavorable foreign currency translation. Shares of TJX plunged 7.6%.
Dick’s Sporting Goods Inc.’s (NYSE:DKS) shares tanked almost 18% after the company reported weak first quarter earnings. The sports and fitness retailer reported consolidated non-GAAP net income for the first quarter ended May 3, 2014 of 50 cents per diluted share, lower than the Zacks Consensus Estimate of 53 cents per share. Decline in sales in its golf business was cited to be the reason behind disappointing first-quarter results. The company reported a 10.4% drop at its Golf Galaxy stores.
Urban Outfitters Inc. (NASDAQ:URBN) also posted lower-than-expected first-quarter fiscal 2015 results. Earnings of 26 cents a share missed the Zacks Consensus Estimate by a penny. Earnings dropped 18.8% from 32 cents delivered in the year-ago quarter, hurt by higher operating expenses. Shares of Urban Outfitters plunged 8.8%.
Retail stocks such as apparel & footwear company Bebe Stores, Inc. (NASDAQ:BEBE), discount stores company Family Dollar Stores Inc.(NYSE:FDO), drugstore chain Vitamin Shoppe, Inc. (NYSE:VSI), food retail company The Fresh Market, Inc.(NASDAQ:TFM), home improvement chain Lowe’s Companies Inc. (NYSE:LOW), specialty stores company Bed Bath & Beyond Inc.(NASDAQ:BBBY), multi-channel retailer of technology products Best Buy Co., Inc.(NYSE:BBY) and specialty retailer PetSmart, Inc.(NASDAQ:PETM) also decreased 4.4%, 2.2%, 1.8%, 1.4%, 0.1%, 1.2%, 5.6% and 4.7%, respectively.
Caterpillar Inc. (NYSE:CAT) led the decline among the Dow components. Shares of the construction and mining equipment giant dropped 3.6% on discouraging sales numbers. Global machine sales plunged 13% during the three-month period ending in April. This was the biggest drop in machine sales since February 2010.
The Industrial Select Sector SPDR (XLI) declined 1.3%, the highest among the S&P 500 sectors. Key stocks from the sector such as General Electric Company (NYSE:GE), United Technologies Corp. (NYSE:UTX), Union Pacific Corporation (NYSE:UNP), The Boeing Company (NYSE:BA) and 3M Company (NYSE:MMM) lost 1.2%, 1.7%, 0.9%, 1.4% and 1.0%, respectively. Overall, 9 out of 10 sectors of the S&P 500 ended in the red.
Meanwhile, Philadelphia Fed President Charles Plosser’s comments intensified selling pressure in the afternoon. Plosser said in a speech in Washington that Federal Reserve might have to raise federal fund rates sooner than later as inflation moves closer to 2% and labor market shows signs of improvement.
Plosser stated “Over the past five years, the Fed and, dare I say, many other central banks have become much more interventionist.” He also said: “I do not think this is a particularly healthy state of affairs for central banks or our economies.”
“With a growing economy and the Fed’s long-term asset purchases coming to an end, now is the time to contemplate restoring some semblance of normalcy to monetary policy,” Plosser added.
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Stock Market News for May 21, 2014 – Zacks Investment Research
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