After a strong rebound last week, stocks traded lower as people came back to work from Presidents Day. The primary reason for the Dow’s downdraft was Wal-Mart which reported disappointing earnings. The one positive from today was the light trading volume but even with that the Dow closed lower by 254 at 24,964.
Wal-Mart posted Q4 numbers at the open and while a 4% revenue increase was good the 2% net income gain was disappointing. The company reported online growth rates that were lower than expected and overall forward guidance was weak. Wal-Mart upped its dividend by 2% and the gurus had expected that with a strong jobs market the company would have benefitted more than it did. Shares were off 9% at the opening.
Home Depot reported earnings and they were above estimates with an increase in sales of 8% and net profits rising by 17%. Home Despot also boosted its dividend by 15.7% which caused investors to send up a cheer. Same store sales were up a sizzling 7.5%.
Steel stocks were higher after Wilbur Ross, head of the US Commerce Department, submitted a recommendation for tariffs on imported steel and aluminum to President Trump. The recommendation cited dumping by China, Russia and Vietnam and concluded these threaten US jobs and production. The president has 90 days to consider the information and make a decision. The recommendation seeks to balance protection for US jobs/production while avoiding a trade war. It will honor the current long term market based supply chain relations the US has with both Canada and the EU. The gurus are skeptical however and feel a trade war will break out making things worse. Time will tell on this but for now the folks in the US steel and aluminum industries are optimistic about the approach.