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Better-Than Expected Retail Sales in June

Zacks Equity Research
While Equity Residential's (EQR) Q2 performance will likely benefit from healthy rental housing demand that would support occupancy level, high supply might curb its pricing power.

Retail Sales in June performed much better than expected, with results posted ahead of today’s opening bell: +0.4% on the headline, above the +0.1% expected. Stripping out auto sales, this number stays 0.4%, and ex-autos & gas it balloons up to +0.7%. The control number was also +0.7%, with May’s control revised up to +0.6%.

Department store sales provided the only smudge on last month’s retail data, down 1.1% in June. But this was partially offset by +0.6% growth in non-store retail sales. Apparently, the consumer has not yet gotten the memo that the economy is supposed to be slowing down.

Import Prices for June do reflect this slowdown: -0.9% on the headline was worse than expected, and down from the -0.3% reported last month. This marks the deepest drop for import prices in six months. Ex-petrol, this figure shifts to -0.4%, two times lower than the expected -0.2%. Year over year, we see import prices down 2%, nearly double the -1.1% reported for May.

Export Prices fell 0.7% last month, down 1.6% year over year. These are both bigger dips than expected, and do seem to illustrate some of the strain from the ongoing trade war between the U.S. and China. Not that any of these numbers have fallen off the table, exactly, but they do demonstrate headwinds are at work in our trade economy to this point.

Q2 Earnings Results

JPMorgan Chase JPM posted $2.59 per share in its Q2 earnings report this morning, 9 cents higher than the Zacks consensus. Revenues of $28.8 billion topped the $28.4 billion expected. However, shares are trading down more than 1% in pre-market activity, as questions about profitability in the face of perceived interest rate cuts will affect the big bank in Q3 and beyond. 

Wells Fargo WFC surprised to the upside for its Q2 earnings, putting up $1.30 per share versus $1.16 our analysts were expecting. This is also better than Q1’s earnings by a solid dime per share. Wells Fargo, finally showing signs of rebounding from its damaging false accounts scandal several quarters ago, has now beaten earnings in three of its past four quarters. Revenues of $23.58 billion beat the Zacks consensus by 3.8%. 

 Staying with the Wall Street investment firms a bit longer, Goldman Sachs GS reported a huge bottom-line beat: $5.81 per share versus $4.73 expected. This was, however, still down from the $5.98 per share reported in the year-ago quarter. Revenues of $9.46 billion outperformed expectations by 9.24% in the quarter. Shares of Goldman are up 26.7% year to date, better than the 20% gains in the S&P 500 over the same period. 

 Zacks Rank #2 (Buy)-rated Johnson & Johnson JNJ posted $2.58 per share for its Q2 bottom line, well ahead of the $2.42 from the Zacks consensus and $2.10 in its year-ago quarter. Revenues of $20.56 billion slightly outperformed estimates, though were down slightly year over year. It’s been a challenging year to date for J&J, only up 4.5%, and shares are slightly lower in today’s pre-market.

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