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Wednesday August 15, 2018



Walmart Posts Mixed Results

Wal-Mart Stores, Inc. (WMT) released its latest quarterly earnings report on Thursday, August 17. The retail chain's revenue exceeded analysts' predictions while profits declined.

The company reported revenue of $123.4 billion for the quarter, up from $120.9 billion during the same quarter last year. This comes out ahead of Wall Street experts' predicted revenue of $122.8 billion.

"Thanks to the team for delivering another solid quarter," said Walmart President and CEO Doug McMillon. "Our customers are responding to the improvements in stores and online and our results reflect this. Traffic increases at store level and the eCommerce growth rate are key highlights. We are moving faster and becoming more creative as we strive to make every day easier for busy families."

Walmart's net income for the quarter totaled $2.9 billion, or $0.96 per share. This is down from $3.8 billion, or $1.21 per share at the same time last year.

The Bentonville, Arkansas-based company is in the midst of a push to expand its stature among online consumers. The company's increased focus on web sales puts it in direct competition with Amazon, whose online presence has been cutting into retail store sales for years. With features like free two-day shipping on many orders and easy re-order, Walmart hopes to maintain its footing as one of the top retailers in America, whether online or in-store.

Wal-Mart Stores, Inc. (WMT) shares ended the week at $79.37, down 1.5% for the week.

Target Reports Comparable Sales Growth

Target Corporation (TGT) reported quarterly earnings on Wednesday, August 16. The company's earnings beat forecast estimates.

Revenue for the retail giant was $16.4 billion for the quarter, slightly ahead of analysts' estimated revenue of $16.3 billion. This is up from $16.2 billion during the same quarter last year.

"I want to thank the team for their strong execution in the second quarter, which drove broad-based improvement in Target's performance," said Target chairman and CEO Brian Cornell. "In particular, we are pleased that second quarter traffic increased more than 2%, reflecting growth in both our store and digital channels. We continue to focus on our long-term strategy, as we work to transform every part of our business and build an even better Target that will thrive in this new era in retail."

Target's net earnings for the quarter were $672 million. This is down from $680 million during the previous year's quarter.

Target attributes much of its success this quarter to strong growth in comparable sales. The company posted a gain of 1.3% in overall comparable sales for the quarter. Comparable store sales grew 0.2% this quarter, while digital comparable sales were up 1.1%.

Target Corporation (TGT) shares ended the week at $55.67, virtually unchanged for the week.

Home Depot Posts Record Revenue

The Home Depot (HD) posted its quarterly earnings on Tuesday, August 15. The home improvement retailer's earnings and revenue exceeded Wall Street expectations.

Home Depot reported net sales of $28.1 billion for the quarter, up 6.2% from $26.5 billion during the same quarter last year. This exceeded analysts' $27.8 billion revenue projection and was the company's highest reported quarterly revenue to date.

"We were pleased with our results this quarter as our customers rewarded us with the highest quarterly sales in company history," said Home Depot chairman and CEO Craig Menear. "We also achieved the highest quarterly net earnings in company history. These results were made possible by our hard working associates and the outstanding values brought forth by our supplier partners."

The company's net income for the quarter was $2.7 billion, or $2.25 per share. This is up from $2.4 billion, or $1.97 per share during the prior year's quarter.

The company announced on Thursday that it will be installing solar panels at 50 of its stores nationwide. The panels will be provided by Tesla and Current, a subsidiary of General Electric. Home Depot will purchase the power generated by the panels from Current and Tesla and expects to reduce its reliance on the electricity grid by 30-35%.

The Home Depot (HD) shares ended the week at $147.46, down 5.5% for the week.

The Dow started the week of 8/14 at 21,946 and closed at 21,675 on 8/18. The S&P 500 started the week at 2,455 and closed at 2,426. The NASDAQ started the week at 6,306 and closed at 6,217.

Treasury Yields Fall After Early Rise

Yields on U.S. Treasury bonds ticked upward to begin the week, but returned to earlier levels by week's end. Tuesday's Commerce Department report on retail sales pushed prices downward temporarily, but a midweek stock market downturn drove an uptick in bond prices.

The Commerce Department released its Advance Monthly Retail report for July on Tuesday. The report showed a 0.6% increase in sales for the month. Consumer spending rose 2.8% for the quarter.

The benchmark 10-year Treasury note opened the week at 2.20% and peaked at 2.29% on Wednesday. During early trading on Friday, the yield had returned to 2.20%.

Bond prices began to rise on Thursday as stocks dipped. The Dow lost more than 274 points, a 1.2% drop, while the NASDAQ and S&P 500 took similar hits.

The market downturn followed President Trump's announcement on Wednesday that he would be disbanding the Manufacturing Jobs Initiative panel and the Strategic and Policy Forum. The announcement appeared to result from concern from the CEOs on the panels related to the President's response to the previous weekend's events in Charlottesville, Virginia.

"Rather than putting pressure on the businesspeople of the Manufacturing Council & Strategy & Policy Forum, I am ending both," said President Trump in a tweet on Wednesday. "Thank you all!"

The 10-year Treasury note yield finished the week of 8/14 at 2.19%, while the 30-year Treasury note yield was 2.78%.

Mortgage Rates Continue to Fall

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, August 17. The report shows mortgage rates falling once again.

The 30-year fixed rate mortgage was at 3.89% this week, down from 3.90% last week. At this time last year, the 30-year fixed rate mortgage averaged 3.43%.

This week the 15-year fixed rate mortgage averaged 3.16%, down from last week's average of 3.18%. During the same period last year, the 15-year fixed rate mortgage averaged 2.74%.

"Following a mild decline last week, the 10-year Treasury yield rose 1 basis point this week," said Freddie Mac chief economist Sean Becketti. "The 30-year mortgage rate similarly remained relatively flat, falling just one basis point to 3.89%. Mortgage rates are continuing to hold at low levels amidst ongoing economic uncertainty."

Based on published national averages, the money market account finished the week of 8/14 at 0.64%. The 1-year CD finished at 1.43%.

Published August 18, 2017
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