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Coffee With Greta: Fed Pause In Question


DJIA Futures: -57 (-0.2%)

SPX Futures: -2 (-0.04%)

NASDAQ Futures: +5 (+0.04%

Good morning friends!

Futures are mixed as traders digest hawkish comments from a key Fed official and Walmart’s strong earnings.

Let’s get right to it!

Dallas Fed President Does Not Support Pause

Dallas Fed President Lorie Logan does not believe current data supports a pause in rate hikes at the bank’s next meeting. 

In a speech prepared for today in San Antonio, Logan said, “The data in coming weeks could yet show that it is appropriate to skip a meeting. As of today, though, we aren’t there yet.”

She is a voting member of the Federal Open Market Committee this year. 

CME Group’s FedWatch Tool shows traders split about 50/50 on whether the Fed will hold rates steady or implement a 25bps hike at the June 14 meeting. 

Logan said, “We haven’t yet made the progress we need to make. And it’s a long way from here to 2% inflation.”

The Fed’s preferred inflation gauge for April, the core PCE price index, will be released next week.

Walmart Jumps After Earnings Beat

Walmart (WMT) shares are up 1.4% ahead of the open after beating Q1 expectations on the top and bottom line and hiking its full-year outlook. 

Here’s how the retailer’s results compared to analysts’ estimates: 

  • Adjusted EPS: $1.47 vs $1.32 expected
  • Revenue: $152.30 billion vs $148.76 billion expected

Sales rose nearly 8% year over year as strong grocery sales helped offset weaker clothing and electronics sales.

Walmart raised its full-year forecast after the beat, now expecting adjusted earnings between $6.10 and $6.20 per share.

But its Q2 outlook was a bit weaker than expected. 

The retailer expects Q2 earnings to range between $1.63 and $1.68 per share vs $1.71 expected.

The CFO said they have seen a shift in consumer spending but shoppers remain resilient. 

He said, “I think that’s in part probably because balance sheets are much stronger than they were pre-pandemic, even at this point.”

Bath & Body Works Surges After Q1 Beat

Bath & Body Works (BBWI) shares are rallying 12.3% in premarket trade after topping Q1 estimates and raising its full-year guidance. 

Here’s how the body care retailer’s results compared to analysts’ expectations: 

  • EPS: $0.33 vs $0.26 expected
  • Revenue: $1.396 billion vs $1.393 billion expected

The CEO said, “We delivered first quarter sales in line with our expectations while our EPS was better than anticipated as we saw benefits from our work to improve merchandise margin as well as early benefits from our cost optimization initiatives.”

Bath & Body Works raised its full-year earnings guidance after the beat to between $2.70 and $3.10 vs $2.50 to $3.00 previously. 

Cisco Drops On Demand Concerns

Cisco (CSCO) shares are down 4.5% ahead of the open despite beating fiscal Q3 expectations as concerns mount about demand.

Here’s how the company’s results compared to analysts’ estimates: 

  • Adjusted EPS: $1.00 vs $0.97 expected
  • Revenue: $14.57 billion vs $14.4 billion expected

But orders declined 23% during the quarter, prompting fears about lower demand. 

For fiscal Q4, Cisco forecast adjusted EPS between $1.05 to $1.07 and revenue growth of 14% to 16%. 

That was better analysts’ estimates for EPS of $1.04 on $14.95 billion in revenue.

The company also raised its full-year profit guidance, expecting adjusted EPS of $3.80 to $3.82.

Weekly Jobless Claims Drop

Weekly jobless claims fell more than expected last week as the labor market remains strong.

The Labor Department reported 242,000 Americans filed initial unemployment claims. 

That was down by 22,000 from the previous week and lower than 255,000 expected.

Continuing claims also fell by 8,000 to 1.799 million in the week ending May 6. 

Philly Fed Manufacturing Index Improves

A key manufacturing gauge shows activity declined for the 9th straight month in May. 

The Philly Fed’s manufacturing index rose by nearly 21 points to negative 10.4 this month.

That was better than expectations for negative 20 but marked the ninth straight negative reading.

New orders increased 13.8 points to negative 8.9, the shipments index improved slightly to negative 4.7, and the six-month business outlook fell by 10.3 points to negative 1.5.

Coming Up: Existing Home Sales, Leading Economic Indicators

The National Association of Realtors reports existing home sales for April at 10:00 a.m. ET. 

That report is expected to show the pace of sales slowed last month to a seasonally adjusted annual rate of 4.26 million units. 

The existing home market has remained restricted by low inventory keeping prices high even amid high mortgage rates. 

The Conference Board also releases its leading economic indicators index for April at 10:00 a.m.

 That survey is expected to fall 0.6% from March. 

That would be the 13th straight monthly decline as the index continues to signal a recession is near.

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