Sorry, folks. Wall Street looks set to open down after the long weekend. By 9 a.m., futures for the Dow Jones Industrial Average, Nasdaq Composite, S&P 500, and Russell 2000 small-cap indexes were all pointing down about half a percent, with the Dow looking to open about 170 points down. A breather was probably to be expected after last week's storming rally, when the broad indices gained about 4%. Ten-year Treasury yields moved up to 2.91% after a strong showing from the Philadelphia Fed nonmanufacturing index pointed to continued economic expansion.
The main culprit this morning is Walmart (WMT). The U.S. consumer bellwether, reporting before the opening bell, fell short of expectations on fourth-quarter earnings. On the positive side, the retail giant's revenues were better than forecast, while another bellwether, Home Depot (HD), beat forecasts on both revenues and earnings. So the economic news may not be as bad as all that. Walmart recently hiked wages and handed out bonuses after the corporate tax cut passed late last year.
Home Depot's results may also suggest the housing market, a key driver of the economy, continues to rise. Both companies are Dow Jones Industrial Average components.
Setting the mood, leading Asian markets were down about 1% overnight. In Europe, the ZEW Economic Sentiment indicator was down in February, but nowhere near as much as economists had predicted. Meanwhile, in Brexity Britain, the CBI Industrial Trends indicator was down, and by more than expected.
Probably the biggest fundamental worry for investors remains the bond market. Ten-year Treasury yields are up to 2.91%--eight basis points higher in just a week, on worries about inflation and interest rates.
As for market calls: Bond market guru Jeffrey Gundlach and Morgan Stanley's economists both warn that the recent turmoil is far from over. On the positive side, investment management giant BlackRock says tax cuts and rising earnings should continue to drive stocks higher. And Goldman Sachs says companies are using some of that extra money to buy back their own stocks. Buyback announcements so far this year are up 22% on a year ago, the bank calculates.
Walmart (WMT) is falling 6.8% to $97.61 in early-morning trading after its fourth-quarter earnings disappointed-despite higher sales-and it lowered its guidance for fiscal 2019. Yet, as Barron's wrote, guidance isn't the only thing to look for as Walmart and others push their omnichannel operations as they race to compete with Amazon.com (AMZN).
Speaking of retailers, Home Depot (HD) is up 2.2% to $191 following its better-than-expected fourth-quarter earnings. As Barron's has noted in the past, home-improvement retailers, including Home Depot and rival Lowe's (LOW), have been able to thrive despite the e-commerce boom.
Medtronic (MDT) is up 1.3% to $84.35 following its in-line third-quarter earnings and upbeat revenue.
MGM Resorts International (MGM) is down 1.7% to $33.90 after its fourth-quarter earnings missed expectations, although sales were above estimates. Analysts think it's unlikely that MGM could be a buyer for troubled Wynn Resorts (WYNN).
Rite Aid (RAD) is up 13.2% to $2.41 after its announcing it will merge with Albertsons Companies.
Snap (SNAP) is down 5.2% to $19.35 after Citigroup cut its rating on the stock from Hold to Sell. The stock had gained nearly 40% year to date, as of Friday's close. -Teresa Rivas
Facebook's (FB) winter of discontent gained an ominous tone over the holiday weekend.
Russian operatives repeatedly exploited the social network and its photo-sharing site, Instagram, to manipulate and deceive the American electorate via fake Facebook Groups and bogus digital ads, according to a 37-page indictment released by the Justice Department.
Mark Zuckerberg's company was the technological tool of choice to commit election fraud, based on the frequency with which it was mentioned (41 times) in the indictment-though it is not accused of wrongdoing.
Rob Goldman, vice president of advertising at Facebook, tweeted that the goal of the Russian intervention was to create divisions in U.S. society rather than tilt the presidential campaign.
It's yet another public-relations black eye for Facebook, which has faced withering criticism for its unwitting role in the 2016 presidential election and its alleged unhealthy effect on some consumers.
What is outlined in the indictment gives further credence to rising cries of regulation for beleaguered social-media platforms led by lawmakers such as U.S. Sen. Mark Warner (D, Va.), vice chair of the Senate Intelligence Committee. Facebook has vowed to spend more money on monitoring content, though this feels like a belated gesture.
Zuckerberg & Co. helped create a phenomenon-their 2.13 billion members would make Facebook the world's most populous country-but they also created a Frankenstein monster, with unintended consequences.
With a crucial midterm election 10 months away, and murmurs already of Russian interference, some form of regulation-or at least, oversight-might be necessary to help rehabilitate Facebook's tattered image. -Jon Swartz
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