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News of the day for May 17, 2023

Inside Target

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House Speaker Kevin McCarthy said a debt ceiling deal could be ready by the end of the week and Target’s earnings show that consumers are buying more necessities and fewer discretionary items. Here’s what investors need to know today.

1. Target Beats Expectations But Quarterly Profits Shrink

Target (TGT) beat analyst expectations with its earnings release and stuck with its outlook for the fiscal year. The big-box retailer reported quarterly earnings per share of $2.05, down from last year’s $2.16 a share, but better than the $1.72 that analysts expected. Customers bought fewer discretionary items and more necessities, Target CEO Brian Cornell said, after year-over-year sales grew by 1%. Shares of Target moved 1% higher in pre-market trading after the release.

2. McCarthy Sees Week-End Timeframe on Debt Deal After White House Meeting

After an Oval Office meeting Tuesday afternoon, Republican and Democratic leaders have appointed negotiators to continue work on the debt-ceiling limit that the U.S. government is projected to reach by June 1.  House Speaker Kevin McCarthy said he was optimistic that lawmakers could reach a deal by the end of the week, which would still give the Congress time to write and approve the legislation.

3. Musk Sees Economic Slowdown Coming But Says Tesla is Well Positioned

Tesla (TSLA) will begin delivering its Cybertruck this year and the company will consider advertising through traditional channels, potentially reversing its long-standing opposition to standard marketing practices. Tesla CEO Elon Musk said that he expects an economic slowdown over the next 12 months, but that the electric vehicle maker would be well positioned, predicting that the Model Y will be the world’s best-selling car this year. Tesla shares were up 1% in pre-market trading.

4. Rushed Takeover of Credit Suisse Costs UBS $17 Billion

UBS (UBS) will take a $17 billion financial hit for its emergency takeover of Credit Suisse, as the Swiss bank told U.S. regulators that the rushed deal may have affected due diligence. In a filing with the Securities and Exchange Commission, UBS said the takeover reduced its fair value by $13 billion and will create $4 billion in regulatory costs. Shares of UBS were up slightly in pre-market trading.

5. Siemens Beats Quarterly Sales and Raises Yearly Outlook

German engineering and technology company Siemens (SIEGY) beat sales forecasts for its second quarter, as strong demand helped move its factory automation and smart buildings divisions to their highest profits. The company’s transportation unit returned to profitability after its withdrawal from Russia last year and it increased its revenue growth outlook for the fiscal year. Shares of Siemens were trading lower by more than 1%.

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  1. CNBC. “Target tops earnings expectations, even as sales barely budge and consumers watch spending.”

  2. Yahoo Finance. “'We've got a lot of work to do': Biden and McCarthy have new negotiators but no deal.”

  3. CNBC. “Tesla 2023 shareholder meeting: Musk talks Cybertruck, economy, advertising.”

  4. CNBC. “UBS expects $17 billion hit from Credit Suisse rescue, flags hasty due diligence.”

  5. Reuters. “Siemens raises full year outlook after 2nd quarter sales beat.”

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