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Markets Bounce Back, Lowe's & Target Post Q1 Beats

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Wednesday, May 20, 2020

Pre-market futures are bouncing back this morning, following Tuesday’s sell-off when major indexes sank between 0.5% and 1.5% in regular trading. This followed a robust Monday on positive vaccine data for a potential forthcoming drug to bring about the end of the COVID-19 crisis.

The U.S. will see a grim threshold passed in regard to this disease when it reports its death toll at 100K over the next couple days. Thus far, more than 1.5 million Americans have reportedly been infected with the coronavirus.

Voluntarily shutting down the economy — not just here in the U.S. but globally, as this pandemic has reached virtually everywhere on the planet — obviously comes with a huge cost in terms of growth, trade, employment and, of course, health. We’ll see tomorrow how many more new jobless claims have been made in the past week; thus far, 36 million Americans have lost their jobs since actions to thwart the pandemic took place a couple months ago.

Unsinkable Market Spirits

So with the market buoyant again, this demonstrates bullish spirits have not been quashed — not by a long shot. This is very good news for those of us who chose to stay invested in the market. Even with the jaw-dropping sell-offs we saw throughout the month of March, the current situation — while in no ways optimum — appears to be a maintainable situation as the market looks toward reopening the economy on a wider scale, with FDA-approved treatments available for those who do fall ill of the disease in the future.

Some investors don’t even need to wait until a future date for good news: Lowe’s (LOW - Free Report) blew the doors off its Q1 estimates this morning, with earnings of $1.77 per share topping the Zacks consensus of $1.29, for a 45% gain year over year. Revenues of $19.675 billion surpassed the $18.26 billion expected, up nearly 11% from the April quarter a year ago. Comps rose 11.2% in Q1, boosted by 12.3% growth in Home Improvement. This is up big from the +2.6% reported the previous quarter.

The company did suspend share buybacks for the remainder of 2020, but shares are nevertheless up 5.46% thus far in today’s pre-market. This swings LOW’s shares to positive year-to-date for the first time since the March sell-off. For more on LOW’s earnings, click here.

Target (TGT - Free Report) also topped estimated on both earnings and sales for its Q1, with 59 cents per share coming in 13 cents ahead of the Zacks consensus (though well below the $1.53 per share reported in the year-ago quarter). The big-box retailer has not missed earnings estimates since the October quarter of 2018, for a string of 6 straight beats in a row. Revenues of $19.62 billion beat expectations by 2.7%, and were up from $17.63 billion a year ago. Shares are up 2% in today’s pre-market, but still down slightly for the year. For more on TGT’s earnings, click here.

Mark Vickery
Senior Editor

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