Stocks Trading Subdued Amid Reports on Home Sales

U.S. stocks are subdued following yesterday’s release of the minutes from the Fed’s July monetary policy meeting. Economic data came in better-than-expected on jobless claims and manufacturing output out of Philadelphia. Stronger-than-anticipated earnings results from Dow member Cisco Systems are lifting its shares, though Kohl's Corporation's miss and lowered guidance is weighing on its shares. BJ Wholesale Club is trading higher after beating forecasts and issuing higher FY guidance. In other economic news, existing home sales fell more than expected, marking the sixth straight monthly decline. Additionally, the Leading Index decreased less than expected. Treasuries are edging higher to pressure yields, and the U.S. dollar is increasing. Crude oil prices are rising, while gold is trading lower. Asia finished mostly lower in the wake of recent disappointing Chinese economic and earnings data, while Europe is ticking mostly higher despite some unfavorable economic data.

At 10:52 a.m. ET, the Dow Jones Industrial Average is down 0.2%, while the S&P 500 Index and Nasdaq Composite are up 0.1%. WTI crude oil is rising $2.29 to $90.40 per barrel, and Brent crude oil is up $2.54 at $94.19 per barrel. The gold spot price is trading $0.40 lower to $1,776.30 per ounce, and the Dollar Index is 0.5% higher to 107.08.

Dow component Cisco Systems Inc. (CSCO $50) reported adjusted fiscal Q4 earnings-per-share (EPS) of $0.83, above the $0.82 FactSet estimate, as revenues were flat year-over-year (y/y) at $13.1 billion, topping the Street's forecast of $12.7 billion. The company said it saw strong demand with record full year product orders and backlog and it made progress on its business model transformation with annualized recurring revenue rising 8.0% y/y. CSCO issued current year revenue guidance that was above estimates, and an EPS outlook that was mostly in line with expectations. Shares of CSCO are trading higher.

Kohl's Corporation (KSS $32) reported Q2 EPS of $1.11, one penny short of expectations, with revenues dropping 8.1% y/y to $4.1 billion, just above the estimated $4.0 billion. Q2 same-store sales declined 7.7% y/y, compared to the forecasted 8.1% decrease, and its gross margin came in below projections. The company said its Q2 results were impacted by a weakening macro environment, high inflation, and dampened consumer spending, which especially pressured its middle-income customers. KSS lowered its full year guidance, but said it is accelerating its share repurchase program to buy back approximately $500 million of its stock. Shares are lower.

BJ Wholesale Club Holdings Inc. (BJ $75) announced adjusted Q2 EPS of $1.06, north of the $0.80 estimate, as total revenues rose 22.2% y/y to $5.1 billion, above the forecasted $4.7 billion read. While gross profit increased in the second quarter, merchandise margins decreased 50 basis points due to increased freight costs as well as investments in inflationary categories. The discount retailer stated that its expansion plans remain on track, as 11 new club openings are expected in FY22. BJ’s President and Chief Executive Officer stated, “We are expanding our footprint into new and existing markets with success. Our business model is designed to work well in the current consumer environment where value is king…” The company issued guidance that came in higher than expected. Shares are trading noticeably higher.

With the retail sector putting the finishing touches on Q2 earnings season, of the 470 S&P 500 companies that have reported thus far, roughly 63% have topped revenue forecasts and approximately 76% have bested profit projections, per data compiled by Bloomberg. Compared to last year, revenue growth is tracking to be up 14.1% and earnings are 8.2% higher.