US FINANCIAL MARKET

U.S. Stocks Flat After S&P 500 Enters Correction – Wall Street Journal, 2/23/2022

• U.S. stocks edged higher at the open a day after concerns over the Ukraine crisis helped push the S&P 500 into correction territory.
• The U.S. stock benchmark rose 0.2% Wednesday, a day after closing down more than 10% from its Jan. 3 record following Russia’s deployment of soldiers in Ukraine’s Donbas region.
• The threat of war in Ukraine has added to uncertainty in global markets. On Wednesday, Ukraine declared a state of emergency and began to mobilize reservists, calling on its citizens to immediately leave Russia.
• On Tuesday, the U.S. laid out an initial round of sanctions against Moscow for what President Biden called the start of an invasion of Ukraine.
• The European Union, the U.K. Canada, Australia and Japan also imposed or proposed restrictions on Russian companies, individuals and financial markets.
• Among individual stocks, Lowe’s rose 5.3% after the retailer logged higher sales and earnings in its fourth quarter.
• Shares of Overstock.com jumped 31% after the company beat earnings expectations.
• In the bond market, the yield on 10-year Treasury notes rose to 1.988% from 1.947% Tuesday.
• Overseas stock markets advanced. The pan-continental Stoxx Europe 600 gained 0.4%, led by shares of auto and chemical companies.
• The Shanghai Composite Index rose 0.9% and Hong Kong’s Hang Seng added 0.6%.
• Oil prices steadied after rising earlier in the week in response to Russia’s troops deployment. Brent crude, the global oil benchmark, was up 0.6% to $97.46 a barrel.
• Natural-gas futures in Europe extended their advance after Germany put the Nord Stream 2 pipeline, which runs directly from Russia, on hold Tuesday.

Lowe’s raises its earnings forecast as a tight housing market, older homes fuel projects – CNBC, 2/23/2022

• Lowe’s on Wednesday surpassed quarterly earnings expectations and raised its forecast for the year, as Americans buy, fix up and renovate homes in a tight real estate market.
• Sales climbed to $21.34 billion from $20.31 billion last year and outpaced analysts’ expectations of $20.90 billion.
• Lowe’s same-store sales in the U.S. increased 5.1% in the fourth quarter, as customers made fewer trips to the company’s website and stores but spent more when they did.
• Transactions in the U.S. fell 4.4% in the fourth quarter compared with the year-ago period.
• Ellison said sales of big-ticket items that cost at least $500 grew 15.6% in the quarter.
• The average ticket at U.S. stores and on Lowe’s website rose 9.5% to $95.66 in the fourth quarter, partially due to inflation.
• In the fourth quarter, Lowe’s net income rose to $1.21 billion, or $1.78 per share, from $978 million, or $1.32 per share, a year earlier. The results were above the $1.71 expected by analysts surveyed by Refinitiv.
• The retailer said it expects earnings per share to range from $13.10 to $13.60 on revenue of $97 billion to $99 billion in fiscal 2022. It had previously forecast earnings per share of $12.94 on revenue of $97 billion for the year, which is a week longer than fiscal 2021.
• It said same-store sales will range from a decline of 1% to an increase of 1% for the full year.

MercadoLibre Beats Revenue Estimates, Gains Market Share in Brazil – Bloomberg, 2/23/2022

• Latin American e-commerce retailer MercadoLibre grew its revenue more than expected and gained market share in Brazil even as Asian players continue to strengthen their footprint in the company’s largest market.
• MercadoLibre posted a net revenue of $2.1 billion in the fourth quarter, a 61% increase from a year earlier and slightly above analyst estimate of $2 billion, according to a statement Tuesday.
• The company reported gross merchandise volume of $8 billion, roughly in line with expectations, fueled by growth in Brazil, where firms including Sea’s Shopee e-commerce platform have been building up their local operations.
• Despite strong revenues, MercadoLibre posted a net loss per share of 0.92 cents on the dollar, below analyst expectations of gains of 0.73 cents per share.
• The results reflect that the fourth quarter is a time of year that concentrates high sales volume but also high expenses, such as marketing, discounts and rebates, Chaves said.

Teladoc stock drops after another quarterly loss for telemedicine company – MarketWatch, 2/23/2022

• Shares of Teladoc Health, fell more than 6% in the extended session Tuesday after investors looked past a narrower quarterly loss and sales that were above expectations.
• Teladoc said it lost $11 million, or 7 cents a share, in the fourth quarter, compared with a loss of $394 million, or $3.07 a share, in the year-ago period.
• Revenue rose 45% to $554.2 million, Teladoc said.
• Analysts polled by FactSet expected the company to report a loss of 57 cents a share on sales of $547 million.
• Teladoc guided for full-year 2022 sales of between $2.55 billion and $2.65 billion, representing 25% to 30% growth and, at the top of the range, in line with expectations.

T.J. Maxx owner results miss estimates due to Omicron-led store closures – Reuters, 2/23/2022

• TJX Cos missed Wall Street estimates for quarterly results on Wednesday, hit by temporary store closures and fewer customers visiting its outlets due to a surge in cases of the Omicron variant during the holiday season.
• In the holiday quarter, the company’s net sales rose nearly 27% to $13.85 billion, missing estimates of $14.22 billion.
• TJX said store closures due to COVID-19 restrictions may have resulted in about $1.45 billion to $1.61 billion in lost sales through the past year, although it added that sales during the holiday season were trending higher before the spread of Omicron cases.
• Excluding items, it earned 78 cents per share in the fourth quarter, missing estimates of 91 cents.
• TJX forecast earnings per share to be in the range of 58 cents to 61 cents in the current quarter, largely below analysts’ expectations of 60 cents, according to Refinitiv IBES data.
• The company also projects U.S. comparable sales to grow between 1% and 3% in the first quarter.

GE CEO sees ‘strong’ revenue growth despite challenges – Reuters, 2/23/2022

• General Electric expects to have “strong” revenue growth this year despite inflationary and supply-chain challenges, Chief Executive Larry Culp said on Wednesday.
• The comments came days after the industrial conglomerate warned that supply and labor shortages, along with inflation, would pressure its profits through the first half of the year.
• Culp said the company is adjusting its prices and trying to keep a lid on costs.
• It is also trying to source alternative parts to help deal with shortages, he added.
• GE, which reported a drop in revenue in the last quarter, expects to return to revenue growth this year.

Rise in Non-Covid-19 Deaths Hits Life Insurers – Wall Street Journal, 2/23/2022

• U.S. life insurers, as expected, made a large number of Covid-19 death-benefit payouts last year. More surprisingly, many saw a jump in other death claims, too.
• Industry executives and actuaries believe many of these other fatalities are tied to delays in medical care as a result of lockdowns in 2020, and then, later, people’s fears of seeking out treatment and trouble lining up appointments.
• In earnings calls for the past two quarters, Globe Life, Hartford Financial Services Group, Primerica and Reinsurance Group of America were among insurers noting higher non-Covid-19 deaths, compared with pre-pandemic baselines.
• Non-Covid-19 excess deaths jumped in last year’s third quarter, after negligible or modest counts in earlier quarters, some life insurers said.
• Those numbers line up with results from an ongoing Covid-19 survey of 20 of the nation’s leading sellers of group-life insurance to employers by the Society of Actuaries Research Institute.
• In the third quarter, the survey shows, incurred claims counts were 37.7% higher than a pre-pandemic baseline, with a nearly 50-50 split between claims directly tied to Covid-19 and those that weren’t, according to R. Dale Hall, managing director of research at the society, a professional organization. The group is still assessing fourth-quarter data.

Twitter Is Selling $1 Billion of Junk Bonds to Fund Share Buyback – Bloomberg, 2/23/2022

• Twitter is looking to raise $1 billion in the U.S. bond market in part to help finance a share buyback, potentially reviving the junk-rated primary market that’s been frozen since Feb. 10.
• The eight-year unsecured notes may be sold as soon as Wednesday, according to a person with knowledge of the matter.
• Proceeds will be used for general corporate purposes, which could also include capital expenditures, investments and working capital, according to a statement.
• The debt is rated Ba2/BB+, both within two rungs below investment-grade. The social-media company’s most actively traded 3.875% notes due in 2027 last changed hands at 98.37 cents on the dollar on Feb 18, according to Trade bond data.
• The debt traded at par as recently as Feb 2.

Some Companies Ditch Annual Raises and Review Worker Pay More Often – Wall Street Journal, 2/23/2022

• The demand for U.S. workers has led some manufacturers, technology firms and other employers to ditch the annual raise and switch to more frequent pay reviews as they compete for talent and keep pace with rising wages.
• CoorsTek, a maker of industrial ceramics, last year started doing quarterly pay reviews, primarily to ensure it could hire and retain workers for critical and hard-to-fill manufacturing roles such as production operators and maintenance mechanics.
• “When the market is evolving in real-time and there really isn’t a leading indicator other than what you’re seeing to compete and hire, you quickly have to adjust,” said Irma Lockridge, the chief people officer at the 6,000-person company.
• In a January survey by the consulting firm Mercer, roughly half of respondents said they didn’t plan additional reviews or salary increases to address inflation this year, though nearly a quarter said they were considering it.
• Around 20% of respondents said they plan to review off-cycle salary increases as needed in 2022.
• Only around 6% of the 2,565 human-resources managers who responded said they had decided to review compensation two or more times this year in response to rising prices.

USPS Seals Gasoline-Trucks Deal, Shunning Biden EV Plea – Bloomberg, 2/23/2022

• The U.S. Postal Service has authorized the replacement of its mail-truck fleet with nearly all gasoline-powered vehicles built by Oshkosh after the Biden administration unsuccessfully pushed the independent agency to increase the number of electric trucks purchased.
• The move, announced in a record of decision made public Wednesday, affirms a decision by the agency to move forward with a contested plan to begin purchasing as many as 165,000 mail trucks over the next 10 years.
• As much as 90% of those will be fueled by gasoline instead of climate-friendly battery power, according to the plan.
• The decision allows the agency to begin purchasing gasoline-powered trucks from Wisconsin military truck maker Oshkosh under a $6 billion contract the Postal Service awarded last February.
• The Postal Service rejected a bid from fledgling electric-vehicle specialist Workhorse Group, and resisted pressure from Biden administration officials to boost electric vehicle purchases beyond its planned 10% baseline.

Russia-Ukraine Crisis Has Big Western Businesses Bracing for Sanctions Fallout – Wall Street Journal, 2/23/2022

• Western companies with operations in Russia and Ukraine are girding for the potential impact of sanctions on their businesses there and readying contingency plans in the event of further military action, after Russian President Vladimir Putin sent troops into two breakaway regions of Ukraine.
• The U.S. and its European allies on Tuesday rolled out a range of sanctions against Russia, which they have promised to ratchet up should Mr. Putin push further into Ukraine. Those future measures could include sanctions against big Russian companies and the country’s business elite.
• Such moves, though, could also complicate operations for various multinationals with operations in Russia and that often join with Russian companies and businessmen. Big oil companies including BP, Exxon Mobil and Shell all have substantial investments in Russia, as do brewing giant Carlsberg and auto maker Renault.