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Q1 GDP Cools on 1st Revision; KSS, BURL, FL Report Q1

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Thursday, May 30th, 2024

The biggest day of market data this week (so far) is today. A first revision of Q1 Gross Domestic Product (GDP), Initial and Continuing Jobless Claims, Advance Trade in Goods, Inventory tallies and more key retail earnings numbers dominate the landscape. Unfortunately, pre-market futures are either discounting positive elements of the new data or they’re simply ignoring it: the Dow is -300 points at this hour, The Nasdaq is -15 and the Nasdaq -25 points. The slo-mo selloff from all-time closing highs appears to be sticking around.

After the initial print on Q1 GDP, today’s first revision takes it down a few pegs. Today’s 1.3% headline is 30 basis points (bps) below the first read, with Consumption coming in at 2.0% — half a percentage point below the prior report and the lowest number we’ve seen since Q2 2023. The Price Index ticked down to 3.0% from 3.1% expected, while core PCE did the same: down 10 bps to 3.6% from the previous month’s 3.7%, which was also this month’s estimate. Tomorrow morning, the full PCE report for April comes out.

Initial Jobless Claims moved slightly higher than expectations. The headline of 219K was 1000 more than anticipated, and above the upwardly revised 216K from the prior week. Continuing Claims were in-line at 1.79 million, amounting to now five-straight months below 1.8 million. For some context, anything beneath 2 million longer-term jobless claims per week is consistent with healthy domestic employment. On the new claims side, we haven’t been above 230K since the first week in May.

Advanced U.S. Trade Balance in Goods for April sank much lower than anticipated. A headline -$99.4 billion was notably lower than the -$91.5 billion consensus. This marks the deepest deficit in nearly two years. Advanced Retail Inventories hopped up half a percentage point month over month to +0.7%, while Advanced Wholesale Inventories swung to a positive +0.2% from -0.4% expected. Another sign of cooling consumer goods-buying is measurable growth in inventory levels. This report checks that box, without question.

Milwaukee-based big-box retailer Kohl’s (KSS - Free Report) is down nearly -25% this morning. This is based on the company’s big misses on both top and bottom lines in its Q1 earnings report before today’s opening bell: negative earnings of -24 cents per share is a negative surprise of -700% from an expected -$0.04 per share. Revenues of $3.38 billion was roughly -4.5% lower than the Zacks consensus. Combined with the -5% share price year to date, Kohl’s shares are now down -30% since early January. For more on KSS’ earnings, click here.

Burlington Stores (BURL - Free Report) , on the other hand, is up close to +17% in early trading. Earnings of $1.42 per share in the quarter outstripped the $1.04 analysts were expecting, for a positive earnings beat of +36.5%. Revenues of $2.36 billion for Q1 topped estimates by +0.79% in the quarter. The stock had carried a Zacks Rank #4 (Sell) into this print, buy its big buy-in ahead of the bell zooms Burlington past the S&P 500’s year-to-date performance. For more on BURL’s earnings, click here.

Foot Locker (FL - Free Report) shares are up +15% this morning. This is also based on its Q1 performance, which showed the specialty retailer beat the Zacks consensus estimate on earnings by a solid dime to 22 cents per share, on $1.88 billion in quarterly sales which were actually light of expectations by -0.41%. Yet after a heavy selloff year-to-date of -27%, its gains this morning mostly just fill in a portion of the potholes. Still, a +83% earnings beat is nothing to sneeze at.

After today’s open, Pending Home Sales for April will come out. These follow last week’s New Home Sales, which slid well beneath estimates and the previous month’s tally. Today, we’re expecting a -0.4% drop from +3.4% gains for March. This more current series of data points continues to point to a slower housing market — some would say it’s a housing recession, actually — as mortgage rate levels remain north of +7% for another month. Also, Costco (COST - Free Report) will report earnings after today’s closing bell.

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