U.S. stocks finished mixed amid a sundry of earnings and economic data. New housing construction unexpectedly declined, but industrial production posted the highest gain in more than three years. Earnings and guidance from the embattled retail sector varied as well, as Dow member Home Depot posted upbeat quarterly results, but TJX Companies and Dick's Sporting Goods disappointed. Meanwhile, Treasury yields dipped and the U.S. dollar fell, gold was higher, and crude oil's recent run tempered a bit.
The Dow Jones Industrial Average (DJIA) declined 2 points to 20,980, the S&P 500 Index lost 2 points (0.1%) to 2,400, and the NASDAQ Composite increased 20 points (0.3%) to 6,170. In moderate volume, 792 million shares were traded on the NYSE and 2.0 billion shares changed hands on the NASDAQ. WTI crude oil inched $0.19 lower to $48.66 per barrel and wholesale gasoline was unchanged at $1.60 per gallon. Elsewhere, the Bloomberg gold spot price moved $6.31 higher to $1,237.13 per ounce, and the dollar index, a comparison of the U.S. dollar to six major world currencies, was 0.8% lower at 98.14.
Dow member Home Depot Inc. (NYSE:HD $159) reported Q1 earnings-per-share (EPS) of $1.67, above the $1.61 FactSet estimate, with revenues growing 4.9% year-over-year (y/y) to $23.9 billion, compared to the projected $23.7 billion. Q1 same-store sales rose 5.5% y/y, topping the expected 4.4% increase. HD raised its full-year EPS outlook, while reaffirming its sales forecast. Shares were higher.
TJX Companies Inc. (NYSE:TJX $74) posted Q1 profits of $0.82 per share, versus the forecasted $0.79, as revenues increased 3.0% y/y to $7.8 billion, below the estimated $7.9 billion. Quarterly same-store sales grew 1.0% y/y, compared to the expected 1.6% gain. TJX issued Q2 earnings guidance that missed forecasts. Shares moved lower.
Dick’s Sporting Goods Inc (NYSE:DKS $41) announced Q1 EPS of $0.52, or $0.54 ex-items, compared to the projected $0.54, as revenues increased 9.9% y/y to $1.8 billion, roughly in line with forecasts. Q1 same-store sales increased 2.4% y/y, below the expected 3.5% rise. DKS issued mixed Q2 guidance, while its full-year EPS outlook had a midpoint below expectations and it lowered its same-store sales forecast for the year. Shares fell sharply.
Housing construction activity misses estimates, industrial production jumps
Housing starts (chart) for April declined 2.6% month-over-month (m/m) to an annual pace of 1,172,000 units, below the Bloomberg forecast of a 1,260,000 unit rate. March starts were downwardly revised to an annual pace of 1,203,000. However, starts on single-family homes ticked higher, while construction on multi-family structures fell. Building permits, one of the leading indicators tracked by the Conference Board as it is a gauge of future construction, decreased 2.5% m/m in April to an annual rate of 1,229,000, after March's unrevised 1,260,000 rate, and south of the expected annual pace of 1,270,000 units. Permits fell for single-family homes, while authorization for multi-family structures gained ground.
This was the lowest level of housing starts since November, suggesting that the shortage of lots and labor that continued to be noted in yesterday's NAHB's homebuilder sentiment report may be starting to hamper construction activity. However, the rise in the heavily-weighted single family homes was a silver lining and after a long downturn, we're starting to see an encouraging uptick in both home ownership and household formations. This suggests that consumer confidence is starting to translate into some economy-boosting action.
Industrial production was up 1.0% month-over-month (m/m) in April, posting a third-straight monthly gain and the largest rise since February 2014, above estimates and March's downwardly revised 0.4% increase. Manufacturing and mining production both rose solidly, while utilities output also gained noticeable ground. Capacity utilization increased to 76.7%, compared to March's unrevised 76.1%, and above forecasts of 76.3%. Capacity utilization is 3.2 percentage points below its long-run average.
Treasuries were mostly higher, as the yield on the 2-Year note was 1 basis point (bp) lower at 1.29%, while the yields on the 10-Year note and the 30-Year bond declined 2 basis points (bps) to 2.33% and 2.99%, respectively.
The domestic economic calendar will be very light tomorrow, with the only item of note being weekly MBA Mortgage Applications.
Europe mixed, Asia higher as plethora of data eyed
European equities finished mostly to the upside, with the markets digesting some mixed earnings and economic data. Oil and gas issues extended yesterday's gains even as crude oil prices paused from Monday's rally that came courtesy of optimism regarding extended production cuts. However, the euro rallied versus the U.S. dollar, while the preliminary estimate of Q1 eurozone GDP showed growth of 0.5% quarter-over-quarter, matching estimates and Q4's pace of expansion.
In other economic news, Europe's new car registrations fell in April and German investor confidence topped forecasts this month but the expectations component missed, while UK inflation figures came in mostly hotter than expected and the eurozone trade surplus widened unexpectedly. Political uncertainty continued to fester ahead of elections in Germany and Italy, while U.K. Brexit negotiations continue as the nation heads for a June snap election.
The British pound rose modestly versus the greenback, while bond yields in the region were narrowly mixed.
Stocks in Asia finished higher with markets in Japan and India gaining ground on optimism about earnings growth and yesterday's rally in oil prices after Russia and Saudi Arabia said they would back a longer-than-expected production cut extension. Markets shrugged off global political and trade uncertainty, as well as the recent string of softer-than-expected Chinese economic data and flared-up geopolitical concerns toward North Korea.
Japanese equities rose, though gains were pared as the yen showed some late-day strength, while markets in India also advanced. Stocks in mainland China increased, as lingering concerns about regulatory crackdowns and economic activity were overshadowed by reports that the government was intervening to stabilize the markets, per Bloomberg, but those traded in Hong Kong dipped slightly. Finally, Australian securities rose, with commodity-related issues advancing to more than offset some sluggishness in the financial sector, while listings in South Korea were also higher.
Reports slated for release on tomorrow's international economic calendar include jobs data from Australia, industrial production from Japan, Italy's trade balance, employment figures from the U.K., and CPI from the Eurozone.