After Market: Earnings Fails Send Retail Stocks into a Tailspin

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Investors are not buying what retailers are selling, in the stores or here on Wall Street, which was why retail stocks lead the broad market sharply lower on Tuesday. The Dow Jones industrial average (^DJI) tumbled 137 points, the Standard & Poor's 500 index (^GPSC) fell 12, and the Nasdaq composite (^IXIC) slid 29 points.

Home Depot (HD) bucked the downtrend, gaining 2 percent. Earnings topped expectations and more importantly, the company said sales this month have been "robust."

But the rest of the sector got hammered, especially apparel retailers, mainly due to disappointing earnings. Urban Outfitters (URBN) dropped 9 percent and TJX (TJX) fell 7½ percent; both fell short of expectations.

The sporting goods chain Dick's (DKS) tumbled 18 percent. It warned about future earnings, and -- this is interesting -- said the trends look negative for its golf and hunting departments.

Staples (SPLS) dropped 12½ percent as net fell sharply from a year ago and the company warned of heavy restructuring charges ahead. J.C. Penney (JCP) fell nearly 5 percent following a Wells Fargo (WFC) downgrade. Over the past year, the stock has lost half of its value.

Macy's (M), Target (TGT), Best Buy (BBY), Sears (SHLD) and PetSmart (PETM) all lost 2½ percent or more.

Elsewhere, General Motors (GM) lost 3½ percent after recalling another 2.6-million vehicles. It has now made 29 separate recalls this year, covering 13 million cars and trucks. It's doubling the charge it expects to take in the current quarter. GM shares are down about 13 percent over the past six months.

Intercept Pharmaceuticals (ICPT) fell 14 percent on a report of possible side effects tied to a key drug. The stock is well off its recent high, but it's still tripled in price this year.

But another biotech company, Ophthotech (OPHT), soared 24 percent. It agreed to sell the international marketing rights to an eye treatment to Novartis. It says the deal could be worth more than $1 billion over the life of the contract.

Finally, Chipotle Mexican Grill (CMG) lost more than 1 percent after getting dipping a toe in the gun control debate. The company has asked customers not to bring firearms into its restaurants.

What to Watch Wednesday:
  • The Mortgage Bankers Association releases its weekly index of mortgage applications.
  • The Federal Reserve releases minutes from its April interest-rate meeting at 2 p.m.
These major companies are scheduled to release quarterly financial statements:
  • American Eagle Outfitters (AEO)
  • Hormel Foods (HRL)
  • L Brands (LB)
  • Lowe's Cos. (LOW)
  • PetSmart (PETM)
  • Target (TGT)
  • Tiffany (TIF)
  • Williams-Sonoma (WSM)
-Produced by Drew Trachtenberg.


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32 Comments

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unitedpaintings

Teadunce, lets hear the Jindahl story again!

May 21 2014 at 11:01 AM Report abuse rate up rate down Reply
laeth8

Vote Republicans out of office in 2014, we don't need that war monger party in office, who pander to the 1%

May 21 2014 at 9:20 AM Report abuse -2 rate up rate down Reply
1 reply to laeth8's comment
alfrankenfool

LMAO, what a fool.

May 21 2014 at 9:48 AM Report abuse +2 rate up rate down Reply
bdgrizcp

Since retail prices for everything has been going up (along with the price of everything else) and wages are stagnant (in effect losing purchasing power) this is just a reflection of that fact. Stands to reason. The push to relocate jobs offshore started decades ago. Putting jobs closer to the eventual market makes sense, and as consumers in the US slow down buying it will continue.

What surprises me most is the durability of the auto sector. People are buying cars like crazy. Here in south FL almost every car I see on the roads is less than a few years old. And in the 80s when I first relocated here it was junkerville.

May 21 2014 at 4:23 AM Report abuse rate up rate down Reply
lpi2007

The Bureau of Labor Statistics , they are as big of a joke as obama

May 21 2014 at 12:03 AM Report abuse -1 rate up rate down Reply
1 reply to lpi2007's comment
laeth8

would you like a little Cheese with that whine, Humm

May 21 2014 at 9:08 AM Report abuse rate up rate down Reply
teaparty2implode

Outsourcing Jobs and The American Dream

Back in 2004, the Bush Administration, despite evidence that demonstrated otherwise, insisted that the movement of American factory jobs and white-collar work to other countries was a positive program. They had also claimed that 1.7 million jobs would be created in 2003. Instead, our country lost 53,000. In fact, 2.2 million jobs were lost during Bush's first three years in office.

By 2006, the Bush Administration was having a difficult time of keeping Americans convinced that outsourcing was beneficial to the US economy. Recognizing that Americans were becoming increasingly doubtful and doubly resentful, a new approach was taken. Acknowledging the loss of a job as being painful to those who suffer the loss, he advocated making sure people are educated in order to “fill the jobs of the 21st century.”

And to just what jobs might he have been referring? In 2007, Goldman Sachs estimated a whopping 400,000 to 600,000 professional services jobs as being moved overseas in the previous few years. 104,000 IT jobs were outsourced between 2000 and 2003. From 2000 to 2004, another 128,000 jobs were slashed from software-producing industries. During this same time frame, 100,000 new jobs for producing software for export to the US, were created in India.

An estimated 75% of all major financial institutions are sending work offshore. One research company found the world's 100 largest financial services firms expect to have shifted $356 billion worth of operations and about 2 million jobs to low-wage countries by 2012. To date, there are at least 40 states contracting out public sector work to off shore locations. The outsourcing of state and local government technology contracts is in excess of $20 billion. The state of Washington discovered that 36 out of 41 governmental agencies were contracting work overseas. Not so surprisingly, most states don't even know how many of their agencies are also outsourcing to foreign markets.

With the level of off shore outsourcing taking place in sectors besides manufacturing, it's hard to understand just what jobs of the 21st century Bush was talking about. He also said we should be making sure to align education with these illusive jobs. How do we educate ourselves to work such jobs when we don't know what they may be?

The Bureau of Labor Statistics shows an alarming picture of the ordeal college graduates are facing in today's job market. Just ten years ago, a little over 81% of college graduates under the age of 25 were working. 59.7% of them were working in positions requiring a college degree. Those students who went on to Masters programs or other forms of continuing education are lumped into the 19% not employed. Ten years later, Oct. 2010 to Mar. 2011, there are less than 75% of college graduates working any job at all. Of those who are working, only 45% are working in jobs requiring a college degree. To make matters worse, the cost of an education at a four year college has risen an average of 30% since 2000, but there are currently 15% less graduates able to find employment for degree required positions. And the stated 15% doesn't include those who are unable to find any job at all. Where are all those 21st century jobs needing educated employees?

In April, the Wall Street Journal reported that some of the country's largest corporations (Wal-Mart, Microsoft, Caterpillar, General Electric, United Technologies, Oracle, Cisco, Intel, Chevron, Merck, and Stanley Works) have cut their workforces by 2.9 million people over the last decade, while hiring 2.4 million people overseas. Since 2001, these corporations have been adding more foreign jobs overseas than jobs created in the US. In the last year alone, they have increased the use of outsourcing by 57%.

Want another slap in the face? Some of these same companies, Cisco Systems for one, want to bring the profits made through outsourcing, back into the US with as little tax liability as possible. Cisco Systems is currently involved with a lobbying campaign called “Win America.” It calls for a tax repatriation holiday that would let big corporations off the corporate tax hook, by allowing them to bring in money they've hoarded overseas at a drastically lower tax rate.

May 20 2014 at 11:48 PM Report abuse -2 rate up rate down Reply
2 replies to teaparty2implode's comment
teaparty2implode

http://terrimeredith.hubpages.com/hub/Outsourcing-The-American-Dream

May 20 2014 at 11:49 PM Report abuse -2 rate up rate down Reply
unitedpaintings

Teadunce, the copy and paste king.

May 21 2014 at 9:27 AM Report abuse +2 rate up rate down Reply
maggiemoe1950

Oh, Just listen to your President. Unemployment is coming down, housing market is picking up,children are getting better education,you get to keep your healthcare, what more could you ask for.I sure things will even improve more when hillary becomes president, aren't you?

May 20 2014 at 9:25 PM Report abuse rate up rate down Reply
Iselin007

Learning about my ancestry at least for a while disfused the stress from this economic nightmare. My people had the First President and they had Two Presidents at the same time. We had one country and we had 2 countries at the same time.

May 20 2014 at 8:33 PM Report abuse rate up rate down Reply
Iselin007

Relax the China Military is at fault the politicians had nothing to do with the economic mess says Humpty Dumpty the only good egg in the hen house.

May 20 2014 at 7:51 PM Report abuse rate up rate down Reply
Iselin007

harperbt
"You are right ! We can't keep making Robots to do our work in Manufacturing and expect to create new jobs , unless it's making the Robots . Quit using such things as self check out and other things that help eliminate jobs . Prices haven't come down because of it that I can see ."
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Robots eliminate workers. Some robots can make and repair other robots. Should be quite a mess when technology reaches saturation because consumer income will be so low all the fancy wheels of progress will grind to a halt. The mensa brains should of come up with the jobs before they got carried away. Thomas A. Edison died before the Great Depression. Today the thinkers aren't thinking about the end result for the others left behind.

May 20 2014 at 7:41 PM Report abuse +1 rate up rate down Reply
1 reply to Iselin007's comment
Leroy Gd

Agreed! Let's stop all advancements and new ideas. That darn Henry Ford with his assemble line nonsense. What evil minded jerk invented the wheel? Why was fire needed?
What a simple minded pleb this genius is who the democrats know they can use to their advantage.

May 20 2014 at 8:23 PM Report abuse +1 rate up rate down Reply
Iselin007

You can't expect a recovery when a large portion of the population was left with crap jobs or no jobs. Too much merchandise for sale to few people with enough income.The rising use of public assistance might clue you in to the real economy.

May 20 2014 at 7:20 PM Report abuse +4 rate up rate down Reply