The earnings hit parade keeps on rolling, but not in the directions bulls wanted or expected. And with stocks priced well beyond perfection, today’s reaction should hardly be a surprise. Yet, treasury yields soared once again in spite of poor earnings, and in spite of a flat industrial production report.

Wal-Mart, Macy’s, Kohl’s Cut Profit Outlook

Yahoo!Finance reports Wal-Mart cuts profit outlook on shopper worries

Wal-Mart Stores Inc. cut its annual profit and revenue outlook Thursday as the world’s largest retailer expects a tough economy at home and abroad to continue to squeeze its low-income shoppers through the rest of the year.

Wal-Mart also reported second-quarter results that missed Wall Street estimates. The company’s stock fell nearly 2 percent in premarket trading.

Wal-Mart’s sober assessment of consumer spending adds to worries in earnings from Macy’s Inc. and Kohl’s Corp. Both lowered their expectations for the year after reporting disappointing results.

Wal-Mart said recent tax changes have further put pressure on its shoppers. Americans are dealing with a 2 percentage-point increase in payroll taxes that took effect Jan. 1. That means that take-home pay for a household earning $50,000 a year has been sliced by $1,000.

“The retail environment remains challenging in the U.S. and our international markets, as customers are cautious in their spending,” Wal-Mart Chief Financial Officer Charles Holley said in a statement. He noted a “reluctance” among its customers to spend on discretionary items like flat-screen TVs.

Cisco to Cut 4,000 Jobs, Blames Weak Economic Recovery

The Wall Street Journal reports Cisco to Cut 4,000 Jobs, Blames Weak Economic Recovery.

Cisco Systems Inc. is once again tightening its belt, this time before bad news hits the bottom line.

The Silicon Valley network-equipment giant on Wednesday said it would cut 4,000 jobs, or 5% of its workforce, despite reporting an 18% jump in profit in the fourth fiscal quarter.

“What we see is slow steady improvement, but not at the pace we want,” Mr. Chambers told analysts on a conference call.

While orders from customers in the Americas rose 5% in the fourth period, for example, orders from Asia declined 3%—and its business in China fell 6%.

Cisco, based in San Jose, Calif., is best known for hardware that helps pump data to and around the Internet, selling both to communications carriers as well as other classes of companies. The performance of those mainstay businesses was mixed.

Revenue in Cisco’s biggest segment, switching equipment, rose 5%. But sales were flat in the company’s original business of routing gear.

Cisco may be a mixed bag, but the outlook for retailers certainly is not. Wal-Mart accounts for a whopping 10 percent of nonautomotive retail sales, and its outlook is telling. And once again interest rates are up across the US treasury curve which certainly will not be good for housing or jobs.

Mike “Mish” Shedlock