Looking Up. A weaker dollar was helping to boost stocks Tuesday morning, pushing the S&P 500 ever nearer to its all-time high. Earnings season is coming to an end, but it's certainly not over. Medtronic, and Kohl'sreported before the open, while Myriad Genetics and Urban Outfitters are due after the close. In today's Morning Movers, we...
Susanne Nilsson
•...explain why the dollar shouldn't get all the credit for the market's rally; •...highlight's Kohl's (ticker: KSS) earnings-driven loss; •...and review TJX Cos. (TJX) earnings.
We always need a story to tell about why the market is heading higher, and the one that's making the rounds this morning is about the dollar. In an interview, President Donald Trumpcriticized the U.S. Federal Reserve for raising interest rates, and that has added uncertainty to what had been all but certain. As a result, the U.S. Dollar Index has dropped 0.2% today because one way a currency gains value against another is by being from a country where rates are anticipated to be higher. And a weaker dollar is supposed to be helping risk appetite in the U.S. and abroad. "Those comments mostly affected the dollar (pushing it lower), which on a longer time frame is bullish for stocks," writes The Sevens Report's Tom Essaye.
S&P 500 futures have advanced 0.1%, while Dow Jones Industrial Average futures have risen 42 points, or 0.2%, and Nasdaq Composite futures have gained 0.2%.
The only problem with that story is that the U.S. markets have been rising with the dollar, so in the U.S. at least a strong dollar hasn't been a problem. According to Bloomberg, the 120-day correlation between the dollar and the S&P 500 sits at -0.04%; it was -0.17% in early June. That's basically a way of saying there's very little correlation between the two right now.
Don't expect much to change in Fed policy because of Trump's criticism. "The President would like easier monetary policy, or at least, he would not like to see interest rates marching higher to offset the boost to the economy from his fiscal and trade policies," writes Societe Generale's Kit Juckes. "His liking for low rates is something he has in common with Turkey's President Erdogan, possibly because at heart, both are in the real estate business. The difference, of course, is that President Erdogan can influence monetary policy, because the CBRT is clearly not independent; whereas President Trump can feel let down by Fed under Chair Powell, but he can't do much about it."
Keep that in mind ahead of the release of the minutes from August's FOMC meeting tomorrow, and Fed Chief Jerome Powell's speech at Jackson Hole on Friday.
Discovery (DISCA) is up 2.6% to $28.65 after Jefferies upgraded it to Buy.
JJBers
J.M. Smucker (SJM) is up 3.8% to $111.50 after reporting first-quarter earnings. The packaged-food firm earned $1.78 a share on revenue of $1.91 billion. Analysts were looking for earnings of $1.76 on revenue of $1.95 billion. For the full year, it sees EPS of $8.40 to $8.65, on revenue of $8 billion. The consensus is for earnings of $8.39 on revenue of $8.08 billion.
Kohl's (KSS) is down 3% to $76.50 after reporting second-quarter earnings. The department store earned $1.76 a share on revenue of $4.57 billion. Analysts were looking for earnings of $1.64 on revenue of $4.27 billion. For the full year, it sees EPS of $5.15 to $5.55, compared with the $5.39 consensus estimate.
TJX Cos. (TJX) is up 3.3% to $104.98 after reporting second-quarter earnings. The off-price retailer earned $1.17 a share, with revenue of $9.33 billion. Analysts were looking for earnings of $1.05 and revenue of $8.99 billion. For the full year, TJX sees EPS of $4.83 to $4.88, up from $4.75 to $4.83, and compared with the $4.85 consensus estimate.
Toll Brothers (TOL) is up 9.4% to $38 after reporting third-quarter earnings. The home builder earned $1.26 a share on revenue of $1.91 billion. Analysts were looking for earnings of $1.03 on revenue of $1.81 billion. - Teresa Rivas
Sign up to Review & Preview, a new daily email from Barron's. Every evening we'll review the news that moved markets during the day and look ahead to what it means for your portfolio in the morning.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
