Rover's Weekly Market Brief - 4/8/2016

April 8, 2016 |

Indices

Dow Jones: 17,576.96 (-0.6%)

NASDAQ: 4,850.69 (-1.3%)

S&P 500: 2,047.60 (-1.2%)

Commodities

Gold: 1,240.50 (+1.4%)

Copper: 208.60 (-3.2%)

Crude Oil: 39.53 (-7.7%)

Economy

The FOMC minutes for March showed unanimous approval for a gradual rate hike but some dissension on an April rate increase. Some committee members argued for an immediate rate citing an improving labor market and a below-target-but-rising inflation. The majority urged caution pointing to global weakness and financial market volatility.

The trade deficit increased further driven by falling exports and increasing imports in February. The three month moving average for exports declined 0.5% to $178.2 billion while the imports average increased 0.1% to $224.1 billion . The rising trade deficit drugs down GDP estimates for Q1 2016. Falling exports are attributed to declining financial and transport services while rising imports were due to increasing consumer goods, travel and transport services.

Crude Oil rose 7.7%, this week, in anticipation of the Doha producer meeting scheduled for later this month. It closed at $39.53 per barrel. Commercial crude oil inventories (excluding the Strategic Petroleum Reserve) declined 0.9% to 529.9 million barrels from 534.8 million the previous week. The national average retail regular gasoline price rose 0.8% to $2.083 from $2.066 per gallon the preceding week.

Markets

Walgreens (NASDAQ: WBA) had a 13.6% rise in revenue but a 54.5% drop in net income for Q2 2016 YoY. Diluted EPS also fell 56% to $0.85 from $1.93 the same quarter the past year. Revenue was up across all three business segments following the full integration Alliance Boots into the company. US retail pharmacy sales were up 2.1%, retail pharmacy international were up 80.2%, and pharmaceutical wholesale were up 45.6%.

Darden's (NYSE: DRI) revenue rose 6.7% while net income fell 20.9 % for Q3 2016 YoY. Diluted EPS declined 21.9% to $0.82 from $1.05 YoY. Strong Sales in all restaurant brands—i.e. Olive Garden, LongHorn Steakhouse, Capital Grille, Eddie V’s, Yard House, Seasons 52 and Bahama Breeze—drove the revenue growth while higher interest payments and rising expenses drove down net income. Same-restaurant sales rose 6.2% YoY.

Constellation Brands (NYSE: STZ) posted an 8.3% and a 25.7% rise in revenue and net income, respectively for 2016. Diluted earnings per share increased 24.2% to $5.18 from $4.17 the past year. The growth was driven by higher beers sales (grew 22%) and wine sales (up 8%) and checked by lower spirit sales (down 4%). Beer shipment volume increased 11.3% primarily because of growing demand for craft beer, while wine and spirits shipment volume grew 3.3%.

CarMax (NYSE: KMX) reported a revenue and net income increase of 6.2% and 4.4%, respectively, for 2016. Diluted EPS grew 11% to $3.03 from $2.73 the previous year. Greater unit sales and higher average selling prices drove the revenue growth. Used car revenues were up 6.6%, wholesale vehicle revenues rose 6.8% while other revenues (plan revenues and finance fees) went down 4.2%. Comparable-store-used-vehicle sales rose 2.4 % for the year.

Looking Ahead

Upcoming Events:

Wednesday April 13 — Retail Sales (an indicator for consumer spending)

Thursday April 14 — Consumer Price Index (a measure of inflation)

Earnings Calendar:
Monday Tuesday Wednesday Thursday Friday
Alcoa (AA) CSX (CSX) JP Morgan (JPM) Wells Fargo (WFC) Citigroup (C)
Performance (PSG.TO) Fastenal (FAST) INDITEX (IDEXY) Bank of America (BAC) Reynolds (RAI)

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