Wall Street Northbound Despite Several Concerns
We begin a new week of trading in the green, following a courageous fight-back late last week in the Nasdaq and S&P 500, where a pull-back last Thursday morning on weak jobless claims and Q2 GDP reminded investors we’re still in the midst of major economic challenges. The Nasdaq looks to open at a fresh all-time high. The Dow has yet to climb fully back to pre-Thursday levels.
These challenges continue, particularly in the Retail sector: high-end apparel company Lord & Taylor has at last filed for Chapter 11 bankruptcy protection. Tailored Brands TLRD, parent company of Men’s Wearhouse and Jos. A. Bank, follows “suit.” These latest victims of the economic strain due to our pandemic crisis — now roughly half a year since it began in this country — come after noteworthy bankruptcies from name brands Neiman Marcus, J. Crew and J.C. Penney.
Speaking of the pandemic, worldwide cases are once again picking up steam, even as some of the major hot spots in the U.S. appear to be tapering off a bit. We now see 18 million reported cases with 690K fatalities globally, with 4.75 million cases reported so far in the U.S., with 157K Americans having succumbed to the disease. In fact, nearly one in four fatalities related to COVID-19 have occurred here at home — and this was supposed to be the “down period” of the disease before a “second wave” comes this fall.
Meanwhile, we continue to await Congress agreeing on new relief package for Americans economically affected by the pandemic; its predecessor, The CARES Act, expired last week. The Republican-run Senate and the Democratic-led House are still at something resembling a stalemate regarding how much money (and where to apply it) will be allocated before depression-like conditions begin to take hold for the tens of millions out of work, many since the pandemic began.
This will be a big week for jobs numbers — not just Thursday’s Initial and Continuing Claims, but Wednesday we see private-sector payroll numbers from ADP ADP and Friday is the biggie: non-farm payrolls from the U.S. Bureau of Labor Statistics. Analyst will be looking for the third straight month of positive jobs gains, adding to the 7.5 million jobs having been created in May and June. This, of course, follows the massive drop of 20.7 million jobs reported for April.
Otherwise, we see plenty more Q2 earnings reports this week, from big industry leaders like Disney DIS, T-Mobile TMUS, CVS CVS and Activision ATVI. We’re through Big Tech and not quite to Retail reports yet, but we are starting the “back nine” of earnings season at this stage.
Zacks Rank #2 (Buy)-rated Clorox CLX topped estimates for its fiscal Q4 report this morning, posting earnings of $2.41 per share which beat the Zacks consensus of $2.00. Revenues of $1.98 billion for the Consumer Staples major outperformed expectations by 6.75%. But shares are selling off a bit on the news and lowered guidance -- and that of the company changing CEOs -- following year-to-date stock performance of +54%.
Tyson Foods TSN, also rated Zacks Rank #2 ahead of its fiscal Q3 earnings release this morning, beat earnings estimates by a wide margin: $1.40 per shares versus 90 cents expected. However, sales of $10.02 billion in the quarter missed the Zacks consensus by 5.5%, and was down notably from the $10.89 billion posted in the year-ago quarter. Shares are up 2.5% in the pre-market, however; Tyson had been down 32.5% year to date.
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