STOCK MARKET NEWS: Walmart, Home Depot Dow drags, Larry Summer’s economic warning

U.S. existing home sales dropped to a more than 12-year low in January, but the pace of decline slowed, raising cautious optimism that the housing market slump could be close to reaching a bottom.

Existing home sales fell 0.7% to a seasonally adjusted annual rate of 4.00 million units last month, the lowest level since October 2010, the National Association of Realtors said on Tuesday. That marked the 12th straight monthly decline in sales, the longest such stretch since 1999.

Sales fell in the Northeast and Midwest, but rose in the South and West. Economists polled by Reuters had forecast home sales rising to a rate of 4.10 million units.

Home resales, which account for a big chunk of U.S. housing sales, plunged 36.9% on a year-on-year basis in January.

Home Depot Inc on Tuesday warned of slowing demand for home improvement goods this year as inflation dents the ability of customers to spend on remodeling projects.

The No. 1 U.S. home improvement chain forecast annual profit below Wall Street expectations as it increases spending on wages by $1 billion to tackle labor shortages while struggling with higher costs.

Following an exponential surge in remodeling activity during the pandemic, demand for home improvement tools such as paint and flooring is now cooling as consumers cut back spending, setting the company up for a challenging 2023.

Home Depot’s comparable sales fell 0.3% in the fourth quarter, driven by a 6% drop in customer transactions. Analysts on average expected a 0.6% increase.

The company expects earnings per share to decline in the mid-single digits percentage range for 2023, while analysts were expecting a 0.4% increase to $16.72, according to Refinitiv data.

The U.S. stock averages are off on Tuesday as commodities like oil and gold trade up and down early.

The Dow Jones Industrial, S&P 500 and Nasdaq are all in negative territory, with the tech-heavy index leading the fall as shares of Google, Amazon, Apple, and Microsoft all start the session in the red.

Meanwhile, shares of Meta are up early, gaining roughly 1.3% on news the platform will mimic Twitter with a monthly subscription tier for Facebook and Instagram.

In commodities, oil is up approximately 0.72% to $76.89 a barrel as gold retreats around 0.28% higher at $1,845.00 an ounce. 

Medical device maker Medtronic Plc on Tuesday beat quarterly profit estimates, helped by strong demand for its heart and diabetes devices.

Growth in cardiovascular, neuroscience and diabetes devices helped soften a blow to sales in China from a resurgence in COVID-19 cases, which have hit rivals such as Abbott Laboratories and Johnson & Johnson.

Sales at Medtronic’s heart devices unit, its biggest revenue driver, increased 1% to $2.77 billion, above analysts’ estimates of $2.71 billion, according to Refinitiv IBES data.

Tepid non-urgent procedure growth in some markets also partially offset some of the company’s growth, Chief Executive Officer Geoff Martha said in a statement.

HSBC dampened investors’ expectations of a sustained income bonanza from rising global interest rates, even after Europe’s biggest bank reported a 92% surge in quarterly profit and pledging more regular dividends and share buybacks.

The London-headquartered bank said on Tuesday it would pay a special dividend of $0.21 per share, from the proceeds of the $10 billion sale of its Canada business.

With its $1.3 trillion in customer deposits, HSBC benefits more than many smaller banks from central bank hikes that enable it to charge a wider margin on its loans and mortgages.

The bank however said it expected net interest income to be at least $36 billion in 2023, shy of $37 billion forecasts and a $38 billion annualized figure analysts calculated from its latest quarterly numbers.

“The numbers themselves are strong compared to market expectations but the market was hoping for a little more good news in the outlook statement, so the shares are down by around 1% this morning,” said Steve Clayton, head of equity funds at Hargreaves Lansdown.

“The business is performing well, but much depends on the group maintaining robust cost controls. That means more branch closures in the UK this year, with another 130 set to close. But for shareholders, that intention to pay out half of earnings suggests an ongoing yield from HSBC shares of perhaps as much as 7% this year and next, with that extra USD21c special dividend on top.”

Reuters contributed to this report.

Shares of Molson Coors Beverage Co. are brewing on Tuesday after the company reported fourth quarter adjusted profit that beat expectations.

Net sales for Molson Coors grew 0.4% to $2.630 billion over the quarter but was below the FactSet consensus of $2.644 billion.

Meanwhile, a 10.7% increase in price and mix offset a 6.9% decline in sales volume, and a negative 3.4% effect from a higher dollar. Excluding nonrecurring items, such as a $845 million impairment charge, adjusted earnings per share rose to $1.30 from 81 cents and beat the FactSet EPS consensus of $1.07.

For 2023, the company said it expects sales to increase in the “low single-digit” percentage range.

While Walmart, the nation’s largest retailer, is managing inflation and inventory issues its full-year forecast is not as optimistic as investors had hoped for.

The National Association of Manufacturers is defending its practices on clean energy while asking the EPA to dial back its push to over regulate.

Former U.S. Treasury Secretary Larry Summers is criticizing the Federal Reserve again over their handling of runaway inflation.