Rover's Weekly Market Brief - 5/6/2016

May 6, 2016 |

Indices

Dow Jones: 17,740.63 (-0.2%)

NASDAQ: 4,736.15 (-0.8%)

S&P 500: 2,057.15 (-0.4%)

Commodities

Gold: 1,290.70 (-0.5%)

Copper: 215.30 (-3.2%)

Crude Oil: 44.57 (-2.9%)

Economy

The trade deficit narrowed in March driven by a decrease in the goods deficit and an increase in the services surplus. The deficit was down 13.8% sequentially and down 22.5% year over year. The declining trade deficit marginally improves GDP estimates for Q2 2016. Overall, it underscores the slow growth being experienced in the US and abroad.

Crude Oil fell 2.9% this week to close at $44.57 per barrel. However, it remains volatile because of disruptions in Canada (due to fire), Libya (competing political factions) and Nigeria (attacks on oil facility). Commercial crude oil inventories (excluding the Strategic Petroleum Reserve) increased 0.5% to 543.4 million barrels from 540.6 million the previous week. The national average retail regular gasoline price rose 3.6% to $2.240 from $2.162 per gallon the preceding week.

The labor market displayed moderate weakness as nonfarm payroll rose 160,000 while the unemployment rate remained unchanged at 5% in April. Job gains occurred in professional and business services, healthcare, and financial activities while mining continued to post losses. The labor force participation rate declined to 62.8%.

Markets

Kraft Heinz (NASDAQ: KHC) saw its revenue and net income rise 165% and 225% respectively, for Q1 2016. Diluted EPS also rose 204% to $0.73 from $0.24 YoY. The revenue increase was due to the merger of Kraft Foods into a wholly owned subsidiary of H.J. Heinz Holding Corporation last year. Integration and restructuring expenses rose as the company reorganizes and integrates Kraft.

CVS Health (NYSE: CVS) recorded an 18.9% increase in revenue and a 6.1% drop in net income for Q1 2016 YoY. Diluted EPS also fell 2.8% to $1.04 from $1.07 YoY. The revenue growth was driven by higher pharmacy network claims, Omnicare acquisition, and the addition of Target clinics. On the flip side, the integration of Omnicare and Target clinics increased operating expenses thus dragging down net income.

AIG (NYSE: AIG) announced a 26.3% decline in revenue and a $183 million net loss for Q1 2016 YoY. Consequently, diluted losses per share were $0.16 from earning per share of $1.78 the same quarter the previous year. Declines in premiums written and net investment income drove the revenue drop.

Sysco (NYSE: SYY) posted a revenue increase of 2.2% and a net income rise of 22.7% for Q3 2016 YoY. Diluted EPS grew 26.7% to $0.38 from $0.30 the same quarter the past year. Higher consumer spending, favorable weather conditions and lower fuel prices drove the revenue growth while lower debt levels lifted the bottom line.

Looking Ahead

Upcoming Events:

Thursday May 12 — Jobless Claims (an indicator of labor market strength)

Friday May 13 — Retail Sales (a measure of consumer spending)

Earnings Calendar:
Monday Tuesday Wednesday Thursday Friday
JD.com (JD) Walt Disney (DIS) Macy’s (M) NVIDIA (NVDA) Toyota (TM)
Incyte (INCY) Allergan (AGN) Wendy’s (WEN) Nissan (NSANY) JC Penney (JCP)

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