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Saturday May 26, 2018



Whole Foods Reports Earnings

Whole Foods Market, Inc. (WFM) announced its second quarter results on Wednesday, May 10. The supermarket chain, which has struggled in recent quarters, posted results in line with expectations.

The company's sales increased 1.1% to $3.74 billion, slightly better than the $3.73 billion analysts expected. Same-store sales for the quarter fell 2.8%, better than the expected 3% drop.

"We are on a path to return to positive comparable store sales and earnings growth next year," said Whole Foods CEO John Mackey. "The Board will continue its comprehensive review of all opportunities to create value. We look forward to continuing our dialogue with shareholders and providing future updates on our progress."

Whole Foods' net income for the quarter was $117 million or $0.37 per share. This number was in line with estimates.

As previously mentioned, Whole Foods reported same-store sales slumped 2.8% during the quarter, its seventh consecutive quarter of declining comparable store sales. For the full year, the company expects same-store sales to fall 2.5%. In an effort to get the company back on track, Whole Foods announced the appointment of five new board members, including the CEOs of Foot Locker and Panera Bread.

Whole Foods Market, Inc. (WFM) shares ended the week at $36.28, down 1.5% for the week.

Kohls' Profit Tops Estimates

Kohls Corporation (KSS) announced its first quarter results on Thursday, May 11. The department store operator reported better-than-expected profit for the quarter.

The company reported that sales fell 3.2% during the quarter to $3.84 billion compared to sales of $3.97 billion during the same period last year. Expectations were for sales to reach $3.90 billion.

"We are encouraged by the significant improvement in sales and traffic for the March and April period, after a weak February start to the first quarter," said Kohls Chairman, CEO and President Kevin Mansell. "Continued strong inventory management led to a major improvement in gross margin, and our teams managed expenses exceptionally well."

Kohls posted net income of $66 million or $0.39 per share. This topped the $0.29 expected by analysts.

The company reported that same-store sales declined 2.7% during the quarter, the fifth straight quarter of falling sales. However, this was better than the 3.9% decline the company saw in the same period last year, indicating that the company's efforts to improve the bottom line are working. In order to improve performance, the company closed 19 stores last year and has begun downsizing to smaller locations.

Kohls Corporation (KSS) shares ended the week at $36.49, down 9.4% for the week.

Nvidia Reports Big Earnings Increase

Nvidia (NVDA) announced its first quarter revenue on Tuesday, May 9. The computer chip maker reported big jumps in revenue and income for the quarter.

The company reported that revenue increased 48% to $1.94 billion during the quarter. This beat the consensus estimate of $1.91 billion.

"The AI revolution is moving fast and continuing to accelerate," said Nvidia Founder and CEO Jensen Huang. "NVIDIA's GPU deep learning platform is the instrument of choice for researchers, internet giants and startups as they invent the future."

Nvidia earnings came in at $0.79 per share. This was a 126% increase over earnings of $0.35 per share during the same period last year.

The company's different business categories all saw significant increases. Many of the world's internet and cloud based services—including Amazon Web Services—use Nvidia's chips. Revenue for this segment doubled during the quarter to $318.2 million. The company's gaming business revenue also significantly increased, rising 50% to $1.03 billion. Following the earnings release, Nvidia's shares rose 14.2%.

Nvidia (NVDA) shares ended the week at $127.89, up 22.6% for the week.

The Dow started the week of 05/08 at 20,991 and closed at 20,897 on 05/12. The S&P 500 started the week at 2,400 and closed at 2,391. The NASDAQ started the week at 6,101 and closed at 6,121.

Yields End Week Lower

Treasury yields fell during trading on Friday, May 12. Yields had risen earlier in the week, but the release of mixed economic data and President Trump's firing of FBI Director James Comey dampened investors' earlier optimism.

Increased supply in government and corporate bonds, along with centrist Emmanuel Macron's win in the French presidential election, helped yields rise early in the week. That sense of economic optimism waned as the week progressed.

On Wednesday, President Trump fired FBI Director James Comey, an action that has sparked a media firestorm and heavy criticism. Investors and analysts now fear this latest development will waylay President Trump's agenda, including tax reform and infrastructure, which could dampen economic growth going forward.

Further diminishing the economic outlook were mixed economic reports this week. While one measure of inflation showed it is close to matching the Federal Reserve's preferred 2% target, retail sales grew less than expected, rising 0.4% as opposed to the expected 0.5%.

Consequently, during early Friday trading the benchmark 10-year note yield fell six basis points to 2.34% from 2.42% on Thursday. Yields move inversely to prices, so as yields fall, prices rise.

"It's a pretty clear data response, but it's not going to take us out of the trading range that has been recently carved out," said Blake Gwinn, U.S. rates strategist at NatWest Markets.

The 10-year Treasury note yield finished the week of 05/08 at 2.34%, while the 30-year Treasury note yield was 2.99%.

Mortgage Rates Stay Steady

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, May 11. The report showed mortgage rates remaining steady compared to last week.

The 30-year fixed rate mortgage averaged 4.05% this week. This represents a slight increase from last week when it averaged 4.02%. Last year at this time, the 30-year fixed rate mortgage averaged 3.57%.

This week, the 15-year fixed rate mortgage averaged 3.29%. Last week it averaged 3.27%. The 15-year fixed rate mortgage averaged 2.81% one year ago.

"The 10-year Treasury yield jumped eight basis points this week while the 30-year mortgage rate rose three basis points to 4.05%," said Sean Becketti, Chief Economist at Freddie Mac. "Mixed economic reports over the last few weeks have anchored the 30-year mortgage rate around the 4.0% mark."

Based on published national averages, the money market account finished the week of 05/08 at 0.59%. The 1-year CD finished at 1.35%.

Published May 12, 2017
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