Markets were heading lower on Wednesday morning after applications for new mortgages were up in the past week. The Mortgage Bankers Association reported that requests for new loans and refinancing was up 1.4% for the week ending on August 15. The seasonally adjusted index of refinancing applications was up 2.7%, followed by a drop of 0.4% for new loan requests. Mike Fratantoni, the Chief Economist at MBA, said, “Interest rates dropped last week as a result of the ongoing turmoil in Ukraine and other international concerns, which in turn pushed mortgage rates lower. Overall application volume for conventional mortgages increased. However, there was a 5.9% decline in the number of applications for government mortgages, with both purchase and refinance applications declining.”
Shares of Lowe’s Companies Inc. (LOW) were trading lower on Wednesday after the company reported a rise in profits for the second-quarter beating analysts expectations. The home improvement company reported a 10% gain in net income. Despite the positive moves during the quarter, the company still lowered full-year revenue forecast. The reason? Previous expectations for the second-quarter of the year and year-to-date-sales. During the second-quarter the home-improvement giant earned $1.04 billion, or $1.04 per share. This is up from the $941 million, or 88 cents per share, this time last year. This also beat out analysts’ expectations of $1.02 per share. Revenue was up 6% to $16.6 billion from $15.71 billion. This also beat out analysts’ expectations of $16.57 billion. There was a rise of 4.4% in sales at stores open at least a year, which is a major factor in the health of a retailer. Robert Niblock, Chairman, President and CEO of the company, said that he believes the nicer weather has helped the company recover from their missed first-quarter. “We believe home improvement spending will continue to progress in tandem with strengthening job and income growth,” he said.
Shares of Staples, Inc. (SPLS) were on the decline after the company outperformed estimates for the first time in over a year. The company said they earned revenue of $5.22 billion, or $0.12 per share. Analysts were expecting $5.16 billion in revenue, or $0.11 per share. Despite beating out analysts’ expectations the company said that sales could fall further due to fewer sales of computers and core office supplies. In the recent years the company has been facing higher competition from stores like Wal-Mart and Amazon.com, which both offer cheaper items. In March, the company said that it would be closing 140 stores in North America in an effort to boost profits and place more focus on their online business. The company added to the number this morning, stating they would close an additional 80 stores. Staples Chairman and CEO, Ron Sargent, said, “We’re accelerating growth in our delivery businesses as customers turn to Staples for more products beyond office supplies. At the same time, we have more work to do to stabilize our retail business, and we’re taking action to improve customer traffic, reduce expenses and close underperforming stores.”
That’s all for today,
Warren Gates, Normandy Reasearch