News of the day for August 15, 2024
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Walmart (WMT) shares are jumping in premarket trading after reporting better-than-expected second-quarter results and raising its full-year guidance; July retail sales due this morning are expected to show consumers continue to spend but less than in the heady post-pandemic days; Cisco Systems (CSCO) shares are surging after the networking-equipment firm announced cuts to 7% of its workforce as well as quarterly results that beat forecasts; Ulta Beauty (ULTA) shares are getting a much-needed boost after Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B) unveiled a stake in the cosmetics retailer; and Nike (NKE) shares are rising after billionaire investor Bill Ackman disclosed a stake. U.S. stock futures are gaining after ending higher Wednesday as inflation fell below 3% for the first time in three years, increasing investors’ bets of a September rate cut by the Federal Reserve. Here’s what investors need to know today.
1. Walmart Surges as Retail Giant Boosts Outlook, Notes ‘Stable’ Consumer
Walmart (WMT) shares are rising 6% in premarket trading after the retail giant posted better-than-expected quarterly results and boosted its full-year outlook. Walmart said it expects full-year sales to rise by 3.75% to 4.75% year-over-year and adjusted earnings per share (EPS) at $2.35 to $2.43, both up from previous guidance. Walmart said its raised guidance “assumes a generally stable consumer.” Walmart’s sales for its fiscal second quarter rose 4.8% to $169.3 billion, beating analysts’ estimates, as did adjusted earnings per share (EPS) of $0.67.
2. July Retail Sales Set to Show Gains But Also Signs of Consumer Pullback
Economists expect retail July sales data due at 8:30 a.m. ET to show an increase from June, but also that the post-pandemic spending spree could be ending. Retail sales likely increased 0.3% in July versus the month before, according to economists surveyed by The Wall Street Journal and Dow Jones Newswires. Weakness in the job market and the reliance of customers on credit has some economists asking if shoppers can sustain their spending habits. Wednesday’s mild inflation reading has increased investor bets that the Fed will cut interest rates next month, but with the labor market weak, the robustness of the consumer will be a key data input for the central bank as it determines the extent of easing.
3. Cisco Jumps on Latest Round of Job Cuts, Earnings Beat
Cisco Systems (CSCO) shares are rising 6% in premarket trading after the networking-equipment firm said it is cutting about 7% of its workforce as it pivots to higher-growth areas like cybersecurity and artificial intelligence (AI). Cisco announced the layoffs and also reported lower-than-expected declines in revenue and earnings for the fiscal fourth quarter. The computer networking giant unveiled an initial round of job cuts in February, when it said it would slash 5% of its global workforce, affecting around 4,250 employees.
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4. Ulta Beauty Soars as Buffett’s Berkshire Hathaway Unveils Stake
Ulta Beauty (ULTA) shares are surging 13% in premarket trading after a regulatory filing revealed that Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B) had taken a stake in the cosmetics retailer during the second quarter. According to a 13-F filing, the Omaha-based conglomerate, which has been selling its stake in Apple (AAPL), purchased 690,106 shares of Ulta, with the size of the holding valued around $266.3 million as of June 30. Shares of the specialty chain have fallen 42% since hitting a record high in March. Berkshire Hathaway also disclosed a stake in Heico Corp. (HEI) and the aerospace and electronics firm’s stock is rising about 7%.
5. Ackman Stake Sends Nike Jumping
Billionaire investor Bill Ackman built new stakes in Nike (NKE) during the second quarter, according to a regulatory filing, sending shares in the sportswear maker up around 4% in premarket trading. The SEC filing showed Pershing Square Capital Management had built a stake of more than 3 million shares. Nike has been struggling with falling sales amid a slowing Chinese economy and rising competition from upstarts like Hoka. Its shares are down around 28% so far this year but jumped on Wednesday as a Bernstein Research analyst affirmed a bullish call on the company.
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