The Dow Jones Industrial Average looks set for a higher open this morning as Italian markets calm down. In today's Morning Movers, we...
•...highlight trade tensions that have yet to hurt U.S. markets; •...marvel at the gains in Dick's Sporting Goods (DKS) and Salesforce.com (CRM); •...and ponder the declines in Michael Kors (KORS) and AK Steel (AKS).
Asian markets plunged overnight, as fears about the trade spat between China and the U.S. took over from worried about Europe.
China Wednesday morning threatened to retaliate against president Trump's latest move to impose tariffs on imports from the country. Trump's proposed tariffs, 25% on imports worth $50 billion, is not significant in material terms but markets are concerned it could start a prolonged trade spat.
New economic data in the US Wednesday morning showed the economy slightly weaker than forecast, though only marginally. ADP's private payrolls number came in at 178,000, against a Wall Street consensus of about 185,000, while the latest GDP estimate is at 2.2%, compared to the Street's expected 2.3%.
Meanwhile, Italy is enjoying a relief rally. But don't believe too much of what you hear.
"We are now in that phase where any trader who overheard a conversation in their local Domino's Pizza takeaway considers themselves an expert on Italian politics," warns Paul Donovan, chief global economist for UBS Wealth Management.
Italy's FTSE MIB index is up about 1.3% so far, while Italian government bonds have rallied sharply following Tuesday's crash. European stock markets are just in the black, while the euro is up about a cent against the US dollar.
Helping the mood is a mixture of bear closing, as people who bet against Italian assets are cashing in some of their profits, and soothing sounds out of Brussels, where officials probably don't wish to repeat their blunders from 2016, when they helped the Brexit campaign by issuing veiled threats against the British.
While markets swing up and down, the most interesting new fact out of Italy lately may be the latest opinion poll, which shows the two populist Euro-skeptic parties, Five Star and the Northern League, have seen their combined support jump from 50% at the last election to 57%.
Make of that what you will.
Earnings & News
Dick's Sporting Goods (DKS) is up 23.8% to $37.72 after reporting first-quarter earnings. The athletic retailer earned 59 cents a share on revenue of $1.91 billion, while analysts were looking for earnings of 44 cents a share on revenue of $1.88 billion. For the full year, it expects EPS between $2.92 and $3.12 a share, compared with the $2.91 consensus estimate.
HP Inc. (HPQ) is up 3.6% to $22.07 after reporting second-quarter earnings. The computer and storage maker earned 48 cents a share, matching analysts' expectations, on revenue of $14 billion, above the $13.57 billion consensus estimate. It also raised its full-year forecast, now modeling for EPS of $1.97 to $2.02 a share, above the $1.97 per-share consensus. HP also announced its CFO Cathie Lesjak will step down in 2019, with Steve Fieler taking over the job.
Michael Kors (KORS) is down 4.3% to $65.30 after reporting fourth-quarter earnings. The handbag and accessory maker earned 63 cents a share on revenue of $1.18 billion. Analysts were looking for earnings of 60 cents a share on revenue of $1.15 billion. For the full year, it expects to earn between $4.65 and $4.75, on revenue of $5.1 billion. Consensus calls for EPS of $4.74 on revenue of $5.01 billion.
Salesforce.com (CRM) is up 5% to $133.20 after reporting first-quarter earnings. The cloud computing company earned 74 cents a share on revenue of $3.01 billion. Analysts were looking for earnings of 46 cents a share on revenue of $2.94 billion. For the full year, it expects EPS of $2.29 to $2.31 a share, compared with $2.15 consensus estimate. -Teresa Rivas
Upgrades & Downgrades
Apple (AAPL) is down 0.2% to $187.70 after Maxim Group downgraded it to Hold.
Exxon Mobil (XOM) is up 1.3% to $79.40 after RBC Capital Markets upgraded it to Outperform.
Target (TGT) is up 0.6% to $72.10 after Bank of America Merrill Lynch added it to its US 1 List.
Teradata (TDC) is up 2.9% to $39.80 after Mizuho Securities upgraded it to Buy. -T.R.
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