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Economic and Earnings Data Deluge

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A plethora of new economic data makes news headlines ahead of Wednesday’s opening bell while investors continue to digest the ramifications of the ongoing trade war with China. Retail Sales and Industrial Production for April, along with a new Empire State index for May, are helping push pre-market futures a bit deeper into the red this morning.

Retail Sales were well off estimates: -0.2% is considerably beneath both the +0.1% expected and the upwardly revised +1.7% from March (which were the highest we’d seen in a year and a half). Stripping out auto costs, we see this number swing to a positive, albeit modestly: +0.1%, still down from the 0.7% expected and the +1.2% in the previous month.

The Core read — subtracting autos, building products, food, services, etc. which tend to fluctuate month to month — came in at exactly 0.0%, flat as a pancake. This figure feeds directly into U.S. GDP numbers for Q2, just as Retail Sales brought strength to Q1’s better-than-expected GDP. The 3-month moving average still places us at a mid-2% pace, although the ongoing trade war may provide some negative impact when May numbers come out next month.

Industrial Production and Capacity Utilization for April were also below expectations this morning. A -0.5% headline for production was well below the -0.1% analysts were looking for, and 77.9% for utilization missed the 78.6% estimate and March’s downwardly revised 78.5%. Productivity is the “secret sauce” of a robust economy, which makes these numbers particularly disappointing.

The Empire State index for May brought its strongest level for New York state productivity since last Thanksgiving, after spending most of 2019 so far in single-digit territory: 17.8 also easily topped the 8.0 expected and the 10.1 reported last month. This metric had spent most of 2018 north of this morning’s figure, but it’s nice to see a rebound for businesses in the U.S.’s second-most populous state.

Earnings Results

Both Macy’s (M - Free Report)  and Alibaba (BABA - Free Report)  outperformed expectations on their companies’ respective bottom lines, with both companies gaining in the early market. Macy’s revenues of $5.50 billion were slightly beneath the Zacks consensus and year-ago number.

Both companies performed well relative to expectations in their e-commerce businesses. And for Alibaba’s part, they consider themselves on the “right side of all issues on the table” regarding the U.S.-China trade war.

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