【title loan baton rouge】Stock Market News For Jan 2, 2019
A strong economy will prevent bank failures while higher inflation and a freeze on short-term rate hikes will boost net interest margins.
Wall Street closed on a positive note on the last day of trading in 2018 following positive developments on the trade war front. All three major stock indexes ended in the green. However,title loan baton rouge last month was the worst ever December for equity markets after the Great Depression of 1931.
Likewise, 2018 as a whole was the worst ever year for U.S. stocks in a decade. Market volatility spiked significantly last year. A plethora of issues such as imposition of tariffs, concerns over the Fed’s monetary stance, several geopolitical conflicts, plummeting crude oil prices and expectations of global economic slowdown, kept investors shaky throughout the year.
The Dow Jones Industrial Average (DJI) closed at 23,327.46, gaining 1.2% or 265.06 points. The S&P 500 Index (INX) increased 0.9% to close at 2,506.85. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 6,635.28, rising 0.8%. A total of 7.46 billion shares were traded on Monday, lower than the last 20-session average of 9.22 billion shares. Advancers outnumbered decliners on the NYSE by 2.42-to-1 ratio. On the Nasdaq, advancers had an edge over decliners by 1.81-to-1 ratio. The CBOE VIX decreased 0.4% to close at 28.34.
How Did the Benchmarks Perform?
The Dow ended in positive territory reversing its previous trading day’s losses. Notably, each of the 30 components of the blue-chip index ended in the green. The tech-heavy Nasdaq Composite ended in the green for the fourth successive day due to strong performance by the large-cap tech stocks.
The S&P 500 also ended in positive territory recovering from previous trading day’s losses. The Health Care Select Sector SPDR (XLV) and Consumer Discretionary Select Sector SPDR (XLY) gained 1.5% and 1.1%, respectively. Each of the Industrials Select Sector SPDR (XLI) and Financials Select Sector SPDR (XLF) increased 1%. Notably, all 11 sectors of the benchmark index closed in the green.
Positive Developments on US – China Trade Conflict
On Dec 29, President Donald Trump Tweeted that he had a "very good (telephonic) call" with Chinese President Xi Jinping regarding the lingering trade dispute between the two countries. He also said that progress toward a solution is “moving along very well.” Market participants enjoyed the news which resulted into strong showing by U.S. stocks across the board on Friday.
Consequently, shares of trade-sensitive stocks such as Travelers Companies Inc. TRV and Caterpillar Inc. CAT gained 1.3% and 1.2%, respectively. Caterpillar carries a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
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However, The Wall Street Journal reported that Trump’s statement may be an exaggeration. The report cited unnamed sources, to claim that several top ranked U.S. officials are doubtful about fining an amicable solution unless China agreed to most of the U.S. demands related to trade imbalance and intellectual properties.
Monthly Roundup
Wall Street witnessed its monthly worst performance this year in December. All three major stock indexes – the Dow, S&P 500 and Nasdaq Composite – finished in the red. The Dow and S&P 500 lost 8.7% and 9.2%, respectively. Both indexes witnessed their worst December since 1931 and largest monthly decline since February 2009. The Nasdaq Composite lost 9.5%. The S&P 500 swung more than 1% in either direction nine times in December alone.
The recent rate hike and Fed’s tight monetary policy, partial government shutdown, conflicting news related to trade war between the United States and China and concerns of a global economic slowdown have significantly dented investors’ confidence.
Quarterly Roundup
In the fourth quarter of 2018 also – the Dow, S&P 500 and Nasdaq Composite – ended in the red. The S&P 500 and Nasdaq Composite plummeted 14% and 17.5%, respectively. Both indexes posted their worst quarterly decline since the fourth quarter of 2008. The Dow shed 11.8%, marking its worst quarterly performance since the first quarter of 2009.
Despite gains in November, all three major indexes plunged in both October and December due to yield curve inversion, crude oil prices plunge, ambiguities over future interest rate policy and lingering tariff related problems with China. Notably, crude oil prices crashed 38% in the fourth quarter of 2018.
Yearly Roundup
Wall Street posted its worst ever yearly performance in a decade. Market volatility which first appeared in February following investors’ concerns about hyper-inflation aggravated in March, as a result of the trade conflict between the United States and China.
Although Wall Street had a relatively smooth run in the next six months, the situation worsened significantly in the last three months of the year fueled by a plethora of factors. These include – yield curve inversion, the rate hike and the Fed’s tighter monetary stance, conflicting news related to trade war between the United States and China and concerns of a global economic slowdown.
Extreme volatility marred investors’ confidence in risky assets like equities. The Dow, S&P 500 and Nasdaq Composite – plunged 5.6%, 6.2% and 3.9%, respectively, in 2018. All three major stock indexes recorded their worst ever yearly performance since 2008.
The Dow and S&P 500 posted their first yearly losses in three years while Nasdaq Composite also ended in negative territory, reversing a six yearly winning run. All three indexes ended the year in the red despite gaining in the first three quarters. For the Dow, this happened first time since 1978. The S&P 500 and Nasdaq Composite experienced this phenomenon for the first time since 1948 and 1987, respectively.
Ultimately, 2018 will be recognized as a year marked by extreme volatility. The benchmark S&P 500 swung more than 1% in either directions 64 times. The Dow has swung more than 1,000 points in a single session only eight times in its history, five of which happened in 2018 alone.
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- ·5%, led by a 17% increase in average ticket and a slight decline in traffic. Growth in the quarter reflected the impact of households stocking up on essentials like paper goods and cleaning supplies as the pandemic became a nationwide concern, along with strength in discretionary categories as the quarter came to a close and stimulus dollars and tax refunds were disbursed.
As shown below, the results in the quarter materially changed the trend in two-year stacked comps for each of the banners, along with a significant acceleration for consolidated comps.
The increase in consolidated comps was the primary driver of an 8% increase in revenues to $6.3 billion. The company ended the quarter with 15,370 locations, up less than 1% year-over-year. This reflects a 7% increase in Dollar Tree units, offset by a 4% decline in Family Dollar units.
The top-line results at each banner flowed through to their respective income statements, with Dollar Tree gross margins and operating margins declining year-over-year while Family Dollar gross margins and operating margins expanded year-over-year. On a consolidated basis, gross margins contracted by 120 basis points in the quarter to 28.5%, reflective of a shift to lower-margin consumables, tariff costs and the impact of markdowns from the Easter headwinds at the Dollar Tree banner. The company saw slight operating leverage on SG&A from higher comps, with the net result being an 80 basis point contraction in operating margins to 5.8%, with operating income declining 5% to $366 million. This is not adjusted for $73 million of pandemic-related costs, such as PPE supplies.
In the first quarter, the company opened 85 stores (net of closures) and completed 220 Family Dollar renovations to the H2 format. Importantly, comps at renovated Family Dollar stores continue to outpace the chain average by more than 10%. On the call, management indicated that they plan on reducing both the number of new store openings (from 550 to 500) and the number of H2 renovations (from 1,250 to 750) in 2020.
Personally, given the fact that Family Dollar is seeing material benefits to its business from the pandemic with new or lapsed customers coming into its stores, I think the company should try to get more aggressive with its renovation plans, not less. On the other hand, you could argue that renovations cause short-term disruptions and limit their ability to fully capitalize on the business momentum they are currently experiencing.
As a result of fewer new stores and remodels, management now expects 2020 capital expenditures to total $1.0 billion compared to previous guidance of $1.2 billion. In addition, the company has temporarily suspended share repurchases. At quarter's end, the company had $1.8 billion in cash on its balance sheet compared to $4.3 billion in total debt.
Conclusion
In recent years, Dollar Tree has been a tale of two cities. While its namesake banner has generally delivered impressive financial results, Family Dollar has been a persistent underperformer. This quarter, those results flipped, and given what we've seen in the weeks since quarter's end, there's a decent possibility that we will see something similar in the coming months. As the CEO noted, the second quarter is off to a very good start at Family Dollar.
Here's the important question: how useful is that information is in terms of making future predictions about the business? Will recent success at Family Dollar translate into long-term success for the banner? The optimistic take is that new or lapsed customers, especially those visiting the renovated stores, could become recurring business for the banner. The pessimistic take is that they have experienced short-term success out of necessity as people went to any store that was open to try and find essentials like toilet paper and hand sanitizer that were largely out of stock throughout the retail landscape. From that view, many of these customers could abandon the retailer when life returns to normal. As Philbin noted on the conference call, early on [during the pandemic], folks needed us. Will people still shop as much at Family Dollar when it's no longer a necessity?
Personally, I do not place too much weight on the recent results. I will need to see incremental data points that indicate that Family Dollar has truly won sustained business from these new customers. While I still believe that the Dollar Tree banner is a well-positioned retailer with attractive unit returns, I'm not yet willing to say the same thing for Family Dollar. For that reason, along with the recent run-up in the stock price, I plan on staying on the sidelines for now.
Disclosure: None
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