Tuesday, February 25, 2020
Pre-market futures are mambo-ing back into positive territory on this Mardi Gras day, following a 3.5%+ drop on major indexes Monday. Yesterday marked the third-largest point decline in history, though nowhere near the percentage drops in 1987, 1929 and 2008. Currently in today’s early trading, the Dow is up 145 points, the Nasdaq +71 and the S&P 500 14.5.
By now we all know fears of global contagion of the coronavirus, know as COVID-19, are behind the market pullback, as factories in mainland China continue to be shuttered and travel and business elsewhere — from Italy to Iran — lower forward expectations on economic productivity (to say nothing of the cost of human life). This event compounds what we’d seen in the markets previously, which were big run-ups in December and January as trade war relief between the U.S. and China had signaled smooth sailing ahead.
So even with markets having hived off 3% or more in response to the spreading COVID-19 threat, market participants here at home are again turning to the Fed for assistance. Interest-rate cuts, already below 2% thanks to an accommodative Fed policy over the past several quarters, are expected later in 2020, especially if COVID-19 is not successfully contained.
Analysts give the chance of a quarter-point rate cut to 1.5% in September at nearly 75%. An additional cut in September shows a 60% probability, and some models see a third cut this December, which would take the Fed Funds Rate to an even 1.00%.
The Case-Shiller Home Price Index for December is out this morning, with results 30 basis points higher than consensus, to 3.8%. Notice these results are from late 2019, making it the most lagging indicator on home pricing, though Case-Shiller is known to be a consistently accurate read. Twelve cities in the 20-city survey gained in the month, led once again by Phoenix, Charlotte and Tampa.
Zacks Rank #2 (Buy)-rated Macy’s M outpaced estimates in its fiscal Q4 earnings released ahead of today’s open. Earnings of $2.12 per share easily surpassed the $1.95 analysts had expected (though were down from the $2.73 per share reported in the year-ago quarter). Citing a “meaningful sales uptick during the 10 shipping days before Christmas,” Macy’s posted $8.34 billion in quarterly revenues, up from the $8.32 billion (but down 1.4% year over year). Shares are up slightly in early trading. For more on M’s earnings, click here.
Home Depot HD also impressed investors with its Q4 report this morning, with $2.28 per share beating the Zacks consensus by 18 cents on revenues of $25.78 billion, which beat the estimated $25.75 billion. Earnings for the largest home-improvement retailer improved from $2.09 per share a year ago, while sales in the year-ago quarter were stronger, at $26.49 billion. Home Depot attributes some of its quarterly success to the extra week of operations in the quarter. Shares are up 3% in the pre-market. For more on HD’s earnings, click here.
Questions or comments about this article and/or its author? Click here>>
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>