Dow Jones opens with 100 point loss

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• DAX Review
• Wall Street Review
• Bechtle Earnings
• Macy’s Earnings
• Kohls Earnings

After record-breaking weeks, Equities have had a hard time in the European Markets. Some catalysts for the week development in the Eurozone were the strengthening EURUSD, fueling the European Markets and therefore increasing liquidity in U.S. Markets. German Earnings and the German auto- cartel have been weighting down investor-sentiment. The North-Korea conflict seems to be the most recent agitator for the sell-off on the German markets. For the current trading day the DAX has not been quoting any green digits with the Index going down since its opening without any resistance. 2 Hours before close the German DAX is down 0,91% from its previous close.

Following another record closing high by the Dow Jones Industrial Average to start the trading week on Monday and a late reversal on Tuesday amid growing tensions with North Korea, the stock market, on an extension of those heightened geopolitical concerns yesterday morning, started the middle session of the week, notably to the downside. Of course, the threats and counter threats involving North Korea was not the only influence on Wall Street, as a disappointing revenue release from entertainment mogul Walt Disney also rattled the street and helped to push the Dow down notably to start the day.  In all, the Dow fell back 80 points early, and the NASDAQ, under pressure from declines in several high-profile technology names, tumbled 60 points at the morning’s nadir. In fact, that composite remained the large-cap’s weak link throughout the morning. But it was mainly a story of growing geopolitical risk, as U.S.-North Korean relations continued to deteriorate. Leading the way lower was the consumer discretionary category, which takes in the aforementioned entertainment giant, which lost some 5% of its value in the morning. What did do well early yesterday were traditional safe havens, such as Treasuries and gold. Meanwhile, there was no bounce of note as the morning moved along, as all 10 of the principal equity groups were trading in the red as we approached the noon hour in New York, while losing stocks were sustaining a 2.3 to 1.0 ratio on the Big Board. Further underscoring the weak nature of the day’s action to that point, the CBOE Volatility Index (VIX), widely considered the fear gauge, was up some 7%, to near 12, a one-month high. Overall, we think the market’s response to the threats from North Korea seems rather muted, in part because the consensus seems to be that tensions will eventually subside. The market’s decline then moderated for a time as the afternoon got under way, with the Dow’s loss narrowing to about 40 points. However, that proved to be a brief respite, and stocks soon faltered again, but not dramatically so. In truth, the stock market is a bit frothy, with P/E’s up to around 20 for companies with earnings. That is high, albeit not dangerously so in this low inflationary environment. Still, if traders needed some excuse to sell, the news out of North Korea and the revenue miss at Disney were reason enough. So, stocks wilted, as the afternoon progressed, and as we moved inside two hours, the Dow was near the day’s low. This downturn would then persist up until the final half hour, or so, with few periods of sustained buying to interrupt the downtrend. However, as the session neared its close, some selective buying took hold, enabling the larger-cap composites to notably pare the day’s losses. However, the comeback did not fully encompass the smaller-cap indexes, where the Russell 2000 still ended matters off more than 13 points. As for the various equity sectors, there was only a breakeven performance by the health care group, while the other nine categories posted declines of generally half a percentage point, or less. In the Morning the Dow Jones is down 100 points shortly after open, dropping under the 22’000 point mark, with Goldman Sachs contributing the most losses. The S&P 500 declined 0.6 percent, with information technology and financials leading all sectors lower. The Nasdaq composite pulled back 0.75 percent, with Apple, Alphabet, Amazon and Netflix all trading lower. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, soared more than 24 percent to trade at 13.79.

Information technology company Bechtle AG said its second-quarter earnings after tax rose 11 percent to 25.39 million euros from 22.71 million euros last year. Earnings per share grew to 1.21 euro from 1.08 euro a year ago. Earnings before interest and taxes or EBIT in the second quarter reached 36.5 million euros, an increase of 13.2 percent from 32.3 million euros last year. Quarterly revenue increased 13.7 percent to 822.2 million euros from 723.4 million euros a year ago. Looking ahead, the company’s Executive Board continues to expect significant revenue and earnings growth for the year as a whole and confirms the forecast for 2017 published in March.

Macy’s is taking its victories where it can. On Thursday, the department store chain said comparable sales fell 2.8% in the second quarter, the 10th straight quarter of decline for the retailer. That said, the results were not as bad as investors had feared. Wall Street had predicted comparable sales would drop by 3.5%, according to Consensus Metrix. (Comparable sales exclude recently opened or closed stores.) And profit by one measure came in at 48 cents a share, better than the 45 cents analysts were projecting. Total net sales fell 5.4% to $5.55 billion, slightly above expectations. Despite the not-as-bad-as-expected results, Macy’s did not raise its full year forecast, which suggests the retailer views these improvements as fragile. Investors were sufficiently spooked: Macy’s shares were down 2% in premarket trading to $22.50, about half the level of their 52-week high.

Kohl, who has a recorded success of undermining Macys, has released its and they look crispy. Kohl’s reported a narrower, 0.4 decline in same-store sales, compared to a drop of 1.8 percent during the same quarter last year. Analysts were expecting comparable sales to fall 1.5 percent, according to FactSet. Shares of Kohl’s were recently down 9 percent on the news, after initially jumping 4 percent in premarket hours. “The traffic momentum that we saw in the combined March/April period accelerated in the second quarter,” CEO Kevin Mansell said in a statement. “Though transactions for the quarter were lower than last year, July transactions increased. … We are also excited by the sequential sales trend improvement in all our lines.” Trying to drive shoppers back to its stores, Kohl’s has been testing new initiatives, like entering a partnership with Under Armour to sell the sports retailers merchandise. Management said on Tuesday that it’s also beginning to see benefits from initiatives in place with the goals of better managing inventory and cutting costs. “Under Armour in particular continued a very strong performance and beat the sales plan across almost all categories,” Mansell said on Thursday’s earnings conference call. “We’ve gained significant share in active apparel and footwear in the first half of the year and expect that to continue in the back half based on assortment improvements and our momentum.” The company’s net income rose to $208 million, or $1.24 per share, in the second quarter, from $140 million, or 77 cents per share, a year earlier. Net sales fell 1 percent, to $4.14 billion, notably declining for the sixth straight quarter. Analysts on average were expecting Kohl’s to report an adjusted profit of $1.19 per share and revenue of $4.13 billion, according to a survey by Thomson Reuters.