Wall Street's rally couldn't find the energy to extend into day two on Tuesday, Aug. 15, as retail took focus and investors looked beyond geopolitical headlines.
While the Dow Jones Industrial Average was up 0.02%, the S&P 500 decreased 0.05% and the Nasdaq slumped 0.11%. The S&P 500 was lower for its first day in three.
Retail sales in July rose at a faster pace than anticipated, reaching a seven-month high in a positive sign that consumers were spending in the first month of the third quarter. Sales increased by 0.6%, according to the Census Bureau, higher than an expected rise of 0.4%. Core retail sales rose by 0.5%.
"With job growth accelerating, low unemployment, and even wages ticking up, we're seeing consumers open up their wallets and spend," said E*TRADE vice president of investment strategy Mike Loewengart. "While it's good to see shoppers shopping, that doesn't mean a rising tide will lift all boats. Make no mistake, while these numbers are encouraging, there will continue to be winners, and serious losers in this tumultuous space."
The divides in the retail sector were laid bare in earnings on Tuesday. Advance Auto Parts Inc. (AAP) slumped 20% after falling short of earnings estimates over its recent quarter. Adjusted profit of $1.58 a share fell short of an estimated $1.65. Revenue was flat at $2.264 billion, in-line with estimates. Same-store sales were also flat. For the full year, the retailer anticipates same-store sales will fall between 1% and 3%.
Home Depot Inc. (HD) reported quarterly earnings that exceeded estimates and comparable-store sales growing more than anticipated. Profit rose to $2.25 a share from $1.97 a year earlier, 4 cents higher than targeted. Revenue of $28.11 billion topped estimates of $27.83 billion. Comparable-store sales increased 6.3%, higher than an expected 4.9% gain.
The DIY retailer increased its earnings-per-share guidance to $7.29 a share for the full year, up from a previous estimate of $7.15. Analysts anticipate $7.24 a share. Current earnings guidance implies 13% growth from a year earlier.
Dick's Sporting Goods Inc. (DKS) tumbled more than 23% after a disappointing quarter. The sporting goods retail chain earned 96 cents a share over its second quarter, a nickel below estimates. Revenue increased 9.6% to $2.16 billion, but fell short of consensus by $10 million. Comparable sales increased by 0.1%, far less than estimated growth of 1.8%. For full-year earnings, Dick's anticipates $2.80 to $3 a share, well below estimates of $3.62.
TJX Companies Inc. (TJX) posted surprise earnings growth over its recent quarter. The parent of off-price retailer T.J. Maxx earned 85 cents a share, surprising analysts looking for earnings to hold flat year-over-year at 84 cents. Same-store sales increased 3%, while overall revenue rose 6.1%. The company also boosted its fiscal 2018 earnings guidance.
Coach Inc. (COH) reported a mixed quarter. Net earnings increased to 53 cents a share from 29 cents in the year-ago quarter. Adjusted earnings of 50 cents a share exceeded analysts' forecasts by a penny. Sales dipped 1.7% to $1.13 billion and fell short of estimates by $20 million. For the full year, Coach expects revenue of $5.8 billion to $5.9 billion and earnings of $2.35 to $2.40 a share. Analysts anticipate $5.03 billion in sales and $2.40 in earnings per share.
Around 92% of S&P 500 companies have reported earnings so far this season. Of those, 73.7% have exceeded earnings estimates, above the historical average of 64%, according to Thomson Reuters data. More than 68% have topped revenue consensus, also above an average of 59%. Consumer discretionary and staples stocks have seen the slowest earnings growth, up 3.6% and 4.6%, respectively.