Retail Sales Miss To -0.3%, Bank Earnings Mixed: BAC & BK

Wednesday, October 15, 2019

New Retail Sales numbers for September have been released ahead of today’s opening bell, though results are worse than expected: -0.3% on the headline was the reverse of the consensus estimate +0.3%. Subtracting volatile month-over-month auto sales, this number buoys almost back up to sea level at -0.1%. Minus autos and equally-volatile gasoline prices, we see the headline unchanged. This is the worst Retail Sales print since February.

The good news here comes from August revisions: overall, we go from +0.4% originally reported to +0.6% this time around. Ex-autos, the revision goes from 0.0% to +0.2%, while ex-autos & gas moves up to +0.3%. The control number for September is 0.0, for August it’s an unrevised +0.3%. So at worst we’re looking at a U.S. consumer with notably less appetite to purchase goods and services than previously, and at best this is a one-time glitch where consumption will pick back up going into 2019 holiday season.

Today’s data does beg the question, however, whether estimates for Q3 Gross Domestic Product (GDP) will recede further from its current consensus 1.7%, following the 2.0% reported for Q2 and +3.1% for Q1. Pessimists will say this is clear evidence the slashed corporate tax rate has by now evaporated from its positive use in the U.S. economy, but the fact of the matter is we’re still on pace for GDP growth for 2019 of 2 1/2%, which is hardly anything to sneeze at, especially with an economy this large and with so many global headwinds working against it.

After today’s open, we’ll see Business Inventories for the month of August, as well as the October Home Builders Index. At 2pm ET today, we see the latest Beige Book from the Fed, which summarizes current economic conditions among all U.S. districts. Plenty more grist for the mill, in other words.

Bank of America (NYSE:BAC) reported Q3 earnings this morning, easily beating estimates, especially on the bottom line: 75 cents per share was well ahead of the 50 cents expected. Revenues brought in $22.8 billion versus $22.2 billion analysts were anticipating. Shares are up 1.8% so far in today’s pre-market, with an eye on hitting year-to-date highs. For more on BAC’s earnings, click here.

Bank of New York - Mellon (NYSE:BK) also topped expectations on the bottom line, $1.07 per share versus 99 cents, up 1% year over year. Revenues, however, missed the consensus estimate of $3.90 billion by reporting $3.86 billion. Shares are up 2% on the news in the pre-market, but still in the red year-to-date. For more on BK’s earnings, click here.

After today's closing bell, we'll hear new earnings results from Netflix (NASDAQ:NFLX) and IBM (NYSE:IBM) . Netflix currently carries a Zacks Rank #3 (Hold) with a Value-Growth-Momentum grade of F; IBM is also a Zacks Rank #3, but gets a C grade on Value-Growth-Momentum.

Mark Vickery

Senior Editor

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