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Market Update

Wall Street Reverses Earlier Losses; Target, Lowe's Fall on Outlook


Author: Mukesh Buch
ticker.com
Last Update: 7:33 AM ET August 17 2016

3:00 PM New York – U.S. stocks reverse earlier losses. American Eagle revenues surged 35%. Eaton Vance net soared 14%. Lowe''s net rose 4%. Madison Square agreed to acquire 12% stake in Townsquare Media. Staples net swung to a loss of $766 million. Target offers bleak outlook.

Stocks on Wall Street reversed earlier losses after Fed policy members were divided on the rate outlook.

The latest minute of meetings showed rate setting committee members are looking for more economic data and raised the prospect of rate increase sooner than expected.

Fed board appears to be ready to lift rates but the economic data are still not showing firming of the economy and soft patches.

Earlier in the trading stocks were lower after Lowe’s and Target reported weaker than expected earnings and also estimated weaker than expected same store sales outlook.

Tollbooth Index slipped 37.22 or 0.3% to 11,161.93.

Earnings Review

Analog Devices, Inc (ADI) slumped 2.3% or $1.47 to $63.41 after the integrated circuits maker reported revenues in the third-quarter ending in July rose 1% from a year ago to $869.6 million.

Net income in the quarter soared 35.1% to $230.4 million or 74 cents per diluted share compared to the $170.6 million or 55 cents per share from the same quarter last year.

American Eagle Outfitters (AEO) declined 2.9% or 54 cents to $18.42 after the apparel and accessories retailer said revenues in the second-quarter ending in July surged 35% from a year ago to $822.6 million.

Comparable store sales in the quarter increased 3%.

Net income in the quarter jumped 5.1% to $41.6 million or 23 cents per diluted share compared to the $33.3 million or 17 cents per share from the same quarter last year.

Eaton Vance Corp (EV) gained 1.4% or 52 cents to $38.80 after the investment advisor stated revenues in the third-quarter ending in June dropped 4% from a year ago to $341.2 million.

Net income in the quarter jumped 14.4% to $62.9 million or 55 cents per diluted share compared to the $55 million or 48 cents per share from the same quarter last year.

Lowe's Companies, Inc (LOW) slumped 6.7% or $5.49 to $75.99 after the home improvement retailer reported net sales in the second-quarter ending in July advanced 5.3% from a year ago to $18.3 billion.

Comparable store sales in the quarter jumped 4.4% and comparable sales in the U.S. home improvement business increased 1.9%.

Net income in the quarter jumped 3.7% to $1.2 billion or $1.31 per diluted share compared to the $1.1 billion or $1.20 per share from the same quarter last year.

The Madison Square Garden Co (MSG) fell 18 cents to $186.12 after the sports and entertainment services provider agreed to acquire 12% stake in Townsquare Media Inc, a digital marketing company that owns 310 radio stations, more than 325 websites in the U.S. and operates approx 550 live events.

Staples, Inc (SPLS) plunged 6.2% or 58 cents to $8.76 after the specialty retailer said net sales in the second-quarter ending in July dropped 4% from a year ago to $4.8 billion.

Comparable store sales in the quarter slumped 5%.

Net in the quarter swung to a loss of $766 million or $1.18 per diluted share compared to the profit of $36 million or 6 cents per share from the same quarter last year.

The retailer forecasted revenues third-quarter revenues to decline from a year ago period and diluted earnings per share in the range of 32 cents to 35 cents.

In the year, Staples estimated free cash to generate approx $600 million and plans to close at least 50 stores in North America in this year.

Target Corporation (TGT) plummeted 5.6% or $4.19 to $71.29 after the discount stores operator reported sales in the second-quarter ending in July declined 7.2% from a year ago to $16.2 billion.

Comparable store sales in the quarter fell 1.1%.

Net income in the quarter plunged 9.7% to $680 million or $1.16 per diluted share compared to the $753 million or $1.18 per share from the same quarter last year.

Target lowered estimated comparable store sales in the second-half of the year and same-store sales in the range of -2% to 0% while diluted earnings per share between $4.36 and $4.76 compared to the previous range of $4.76 to $4.96.

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc