The CML Close - End of Day Wrap - 05-18-2022
Markets
Stocks were down... again, but small caps faired better than NASDAQ and the S&P 500. Powell invoked his inner Volcker. Layoffs and hiring freezes are becoming more common. Target saw its largest stock decline in 35-years off of earnings.
| • SPX | 3,924.18 | -164.67 | (-4.03%) |
| • NASD | 11,418.15 | -566.37 | (-4.73%) |
| • DJIA | 31,493.56 | -1,161.03 | (-3.56%) |
| • R2K | 1,772.37 | -67.93 | (-2.70%) |
| • VIX | 31.21 | +5.11 | (+19.58%) |
| • Oil | 109.22 | -3.18 | (-2.83%) |
• Netflix cuts slightly more than 1% of full-time staff. Wayfair confirmed a 90-day corporate hiring freeze. Coinbase slowing hiring given market conditions. Twitter, Meta Platforms, and Amazon pausing hiring.
• Manufacturing capacity utilization rate is highest in 15 years.
• Target not only missed earnings per share expectations by a wide margin, but also offered little comfort with its forecast, as it said margin pressures would remain; the disappointment was magnified by Walmart ’s similarly downbeat report on Tuesday. Lowe’s did better, beating earnings estimates and reaffirming guidance, but that wasn’t enough for investors after rival Home Depot ’s stronger results."
Headlines of the Day
History Says Buying the Dips Is a Dangerous Game
Fund managers are the most pessimistic about global growth in the history of the survey, which goes back to 1994 and more negative about profit forecasts than at any time since October 2008, the darkest phase of the GFC.
Target Extends Rout of Big Retailers as Costs Gnaw at Profit
Company sees lower operating margin amid inflation squeeze. Freight, fuel expenses show little sign of easing, CEO says.
5 Things We Learned From Target's Bad Earnings
Target missed earnings estimates, sending its stock down 25% today. That means investors' recent worries about the retail sector are likely to remain an overhang for the stocks.
Worker Shortages Snarl Shipping Even as Shanghai Lockdown Eases
China appears to be gradually easing its lockdown of Shanghai, but that won’t bring immediate relief to global supply-chain congestion, according to a major shipping company.
United Airlines Updates With Positive Travel Outlook
United Airlines expects passenger revenue in the second quarter to climb 23% to 25% over 2019 levels as travel demand continues to improve.
Economic Data Results for 5-18-2022
United States Housing Starts
Housing starts in the US declined 0.2% mom to an annualized 1.724 million units in April of 2022, after a revised 2.8% drop in March and below market forecasts of 1.765 million.
United States MBA Mortgage Applications
Mortgage applications in the US sank 11% in the week ended May 13th, the biggest decline in three months, as both the purchase index (-11.9%) and the refinancing one (-9.5%) plunged.
United States MBA 30-Yr Mortgage Rate
The average contract rate on a 30-year fixed-rate mortgage edged down by 4bps to 5.49% in the week ended May 13th, but remained at 2009 high levels.
Atlanta Fed GDPNow Estimates
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2022 is 2.4 percent on May 18, up from 1.8 percent the week earlier.
Economic Data Due Tomorrow on 5-19-2022
United States PCE Prices QoQ
Core PCE Prices QoQ 2nd Est Q1
United States Corporate Profits
United States Initial Jobless Claims
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