The major averages are weaker this morning after the Dow managed to rise to close at an all-time high yesterday but is being weighed down today by a post-earnings slide in Walmart. The recent pronounced rise in Treasury yields may be causing a reassessment of risk tolerance, especially given that equities are at or near historic highs. Tech shares, which have outperformed during the rally from the lows last spring, are now under pressure amid profit taking, making the Nasdaq the weakest among the indexes in early trading.
ECONOMIC EVENTS: In the U.S., housing starts fell 6.0% to a 1.58M rate in January, breaking a string of four straight monthly gains to the highest since 2006. Building permits surged 10.4% to a 1.88M rate. The Philly Fed manufacturing index slipped 3.4 points to 23.1 in February, though this was not as weak as expected. Initial jobless claims rose 13,000 to 861,000 in the week ended February 13. Import prices climbed 1.4% in January and export prices surged 2.5%.
TOP NEWS: Shares of Walmart (WMT) are more than 5% lower near noon after the company's mixed Q4 results, as its adjusted earnings missed the consensus forecast and its sales topped expectations. Walmart, which reported Q4 U.S. comp sales grew 8.6% and that U.S. e-commerce sales were up 69% compared to the same period last year, also announced nearly $14 billion in fiscal year 2022 capital investment plans "to build supply chain capacity and automation to stay ahead of demand, improve the customer experience and increase productivity" along with plans to invest in U.S. wages. Net sales, operating income and EPS are expected to decline in FY22 primarily due to the impact of anticipated divestitures, the retail giant added.
In other earnings news, shares of Twilio (TWLO) are up 9% at midday after the cloud communications company reported stronger than expected quarterly results. Conversely, Fastly (FSLY) shares have fallen 14% after what Raymond James analyst Robert Majek called "a small Q4 beat" and the issuance of initial revenue guidance for FY21.
In COVID-19 news, Pfizer (PFE) and BioNTech (BNTX) announced results from an in vitro study that provides additional data on the capability of sera from individuals immunized with the Pfizer-BioNTech COVID-19 vaccine to neutralize SARS-CoV-2 with the South African variant spike protein. "Although the results indicated a reduction in neutralization of virus with all the South African variant spike glycoprotein mutations, all the sera neutralized all the viruses tested. This finding is consistent with recent reports of the neutralization of variant SARS-CoV-2 or corresponding pseudoviruses by convalescent or post-immunization sera," the companies stated. "Nevertheless, Pfizer and BioNTech are taking the necessary steps, making the right investments, and engaging in the appropriate conversations with regulators to be in a position to develop and seek authorization for an updated mRNA vaccine or booster once a strain that significantly reduces the protection from the vaccine is identified," they said. The companies currently are evaluating how the vaccine would work against the Brazilian mutations and others that are emerging, they added.
Shares of GameStop (GME) are 4% lower near noon as the House Financial Services Committee is talking with Keith Gill, who adopted the YouTube nickname “Roaring Kitty,” along with executives from Robinhood, Citadel, Melvin Capital Management and Reddit about the stock frenzy and volatile trading in that and other heavily-shorted stocks that has been attributed to the WallStreetBets Reddit forum.
MAJOR MOVERS: Among the noteworthy gainers was Osprey Technology Acquisition Corp. (SFTW), which rose 28% after the blank check company agreed to combine with BlackSky Holdings. Also higher was Sleep Number (SNBR), which gained 1% after reporting quarterly results.
Among the notable losers was iMedia Brands (IMBI), which declined 18% after a 2.86M share spot secondary priced at $7.00. Also lower was Mednax (MD), which fell 26% after reporting quarterly results.
INDEXES: Near midday, the Dow was down 249.16, or 0.79%, to 31,363.86, the Nasdaq was down 172.13, or 1.23%, to 13,793.37, and the S&P 500 was down 34.21, or 0.87%, to 3,897.12.
Walmart
-8.49 (-5.76%)
Twilio
+33.83 (+8.20%)
Fastly
-13.59 (-14.32%)
Pfizer
-0.235 (-0.67%)
BioNTech
-1.48 (-1.30%)
Osprey Technology Acquisition Corp.
+3.04 (+27.76%)
Sleep Number
+1.66 (+1.39%)
iMedia Brands
-1.54 (-17.54%)
Pediatrix Medical
-7.145 (-25.79%)