1. Home Depot (HD) posts worst revenue miss in more than two decades and cuts guidance. The home improvement retailer reports same-store sales in the first quarter of down 4.5% versus down 1.6% expected. Sees full-year same-store sales down 2% to down 5% compared to prior guidance flat to down 0.7%. Headwinds: Lumber deflation, poor weather, lack of sellers in housing. Pro contractor business healthy but moving from larger to smaller.
2. Dow stock Home Depot’s roughly 2.5% decline on the release sets up the Dow Jones Industrial Average for a modestly lower open Tuesday. The S&P 500 and the Nasdaq are pretty flat. Retail sales for April show a 0.4% gain, only half the expected advance. More evidence of a slowdown in economic activity following last week’s cooler inflation readings.
3. Also keeping a lid on stocks is the debt ceiling stalemate. Deadline early June. President Joe Biden meets with House Speaker Kevin McCarthy and other congressional leaders Tuesday at the White House. With history as our guide, we ran the numbers on how our Club stocks did during and after the 2011 debt ceiling standoff. Many were good buys during the then-crisis-driven market swoon.
4. Whale watching. First quarterly filings from big investors and fund managers after the bell. Warren Buffett’s Berkshire Hathaway built a new stake in Capital One Financial (COF). Berkshire slightly increased holdings of Club stock Apple (AAPL). Bill Ackman’s Pershing Square Capital Management started a new position in Club name Alphabet (GOOGL). David Tepper’s Appaloosa Management increased its stake in Alphabet.
5. Horizon Therapeutics (HZNP) shares sink 17% after a report that the FTC is getting ready to sue to block the biotech company’s $27.8 billion sale to Amgen (AMGN). Both companies are working on eczema and lupus treatments. Democratic Sen. Elizabeth Warren expressed concern about this transaction and another proposed drug deal to the FTC.
(See here for a full list of the stocks in Jim Cramer’s Charitable Trust.)
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