Stocks fall as traders digest mixed retail gains, Powell comments

U.S. stocks fell on Wednesday, giving back some of the previous session’s gains after a string of disappointing quarterly results from some major retailers weighed on the broader market. Investors also priced in further comments from Fed officials reaffirming their inflation target.

The S&P 500 fell more than 1.5%, turning losses after rising 2% a day earlier. The Nasdaq Composite fell 1.6% in early trade, while the Dow lost more than 400 points, or 1.4%.

Prices were lower as some major retailers posted weaker-than-expected earnings results, underscoring the impact of inflation on corporate profits. Target(TGT) Full-year operating income margin forecast cut Wednesday With input and transportation costs still high, it is estimated that transportation costs could increase by $1 billion this year due to higher fuel prices. This is after Walmart (WMT), the largest U.S. retailer, on Tuesday Reported quarterly earnings were weaker than expected It cut its profit forecast for the year, citing higher wages, fuel and food costs. Shares of both companies fell, dragging down peers including Costco (cost) and Dollar General (dangerous goods) less empathy. S&P Retail ETF (XRT) fell more than 5% intraday, with the S&P 500’s consumer staples and consumer discretionary sectors lagging.

The disappointing results outweighed the optimism earlier in the week, when investors received a number of upbeat reports on the U.S. economy. Tuesday was at least a brief rally It followed several solid reports showing that both consumer spending and manufacturing production remained strong.U.S. retail sales rose 0.9% in April after a sharply revised monthly gain of 1.4% in March, suggesting consumers are continuing to spend even as consumer prices rise Fastest climb since 1980sThe latest data on U.S. industrial production also beat expectations, rising 1.1% last month, or more than double the expected increase.

The reports reflected continued resilience in some key components of domestic activity and eased, at least temporarily, concerns that the U.S. economy may be on the verge of a downturn. The still-strong economic backdrop gives the Fed more room to raise interest rates and tighten monetary policy in other ways to lower inflation without fear of seriously disrupting growth in other areas such as the labor market.

Federal Reserve Chairman Jerome Powell acknowledged to the Wall Street Journal on Tuesday that while “There may be some pain in restoring price stability,” He believes the Fed will be able to “maintain a strong labor market.” Powell also said there was “broad support” for two more 50 basis point rate hikes at the Fed’s next policy-setting meeting, reiterating his views at the Fed’s last meeting earlier this month.

“I don’t think what he said caught us off guard…but let’s not forget where we are,” Ryan Detrick, chief market strategist at LPL Financial, said in a statement. told Yahoo Finance Live on Tuesday, Note that the S&P 500 had fallen for six straight weeks prior to this week. “It hasn’t been down for seven weeks in 20 years, so we’re seriously oversold here. And then you come in today and your industrial production is pretty solid, your retail sales are pretty solid. Things aren’t perfect, but we just think pricing There are just too many negatives…it’s a bit over the top for us, and we think it’s likely to be an opportunity for some of the long-term investors here.”

9:34 a.m. ET: Stocks open lower, giving back some of Tuesday’s gains

Here are the key moves in the market as of 9:34AM ET:

  • S&P 500 (^GSPC): -47.92 (-1.17%) to 4,040.93

  • road (^DJI): -313.94 (-0.96%) to 32,340.65

  • Nasdaq (^IXIC): -167.82 (-1.40%) to 11,816.70

  • thick(CL=F): +$1.42 (+1.26%) to $113.82 per barrel

  • gold (GC=F): -$8.10 (-0.45%) to $1,810.80/oz

  • 10-year Treasury note (^TNX): +1.4 basis points, yield 2.9820%

7:42 a.m. ET: Stock futures fall

This is where the market trades on Wednesday morning:

  • S&P 500 futures (ES=F): -30.25 points (-0.74%) to 4,054.50

  • Dow futures (YM=F): -187 points (-0.57%) to 32,394.00

  • Nasdaq Futures (NQ=F): -130.74 points (-1.04%) to 12,429.50

  • thick(CL=F): +$1.32 (+1.17%) to $113.72 a barrel

  • gold (GC=F): -$5.70 (-0.31%) to $1,813.90/oz

  • 10-year Treasury note (^TNX): +2.7 basis points, yield 2.997%

7:38 a.m. ET: Lowe’s Q1 earnings disappoint as cooler temperatures weigh on home improvement sales

Lowe’s (low), the country’s second-biggest home improvement giant, reported results that fell short of Wall Street’s expectations as below-average temperatures at the start of the spring weighed on some demand. Shares were down 2.3% in premarket trading.

Lowe’s said comparable sales fell 4% in the first quarter, a bigger-than-expected decline of 3.25%, according to Bloomberg data. U.S. comparable sales, which are closely watched alone, fell 3.8%. On the bottom line, however, EPS of $3.51 beat estimates.

“Our sales for the quarter were in line with our expectations, excluding the outdoor seasonal category, which was impacted by unusually cold temperatures in April,” Lowe’s CEO Marvin Ellison said in a statement. Press Statement. “Because 75% of our customer base is DIY, our sales in the first quarter were disproportionately impacted by cooler spring temperatures. Now that spring is finally here, we’re delighted with the improved sales trends we saw in May.”

Lowe’s reiterated its full-year EPS forecast of $13.10 to $13.60. Lowe’s added that comparable sales will be in the range of 1% down to 1% up.

7:32 a.m. ET: Mortgage applications fell by the most since February last week

U.S. mortgage applications fell the most since mid-February last week Mortgage rates jumped to their highest levels since 2009, Deterring some refinancers and buyers from entering the market.

According to the company’s latest report, the Mortgage Bankers Association’s weekly index tracking mortgage application volume fell 11% month-over-month in the period ended May 13. Refinancing was down 10% compared to the previous week and 76% compared to the same period last year. Purchases, not seasonally adjusted, were down 12% from the previous week and 15% from the same period in 2021.

“The current level of interest rates remains a significant disincentive for borrowers looking to refinance,” MBA’s vice president for economic and industry forecasting, Joel Kan, said in a press statement. “Purchase applications fell last week. 12% on expectations that “homebuyers will be deterred by rising interest rates and deteriorating affordability conditions. In addition, general uncertainty about the near-term economic outlook and recent volatility in the stock market may cause some households to delay their home search. “

7:22 a.m. ET Wednesday: Target shares slide after company cuts full-year profit guidance due to rising costs

Target Announces first quarter earnings And full-year profit guidance that disappointed Wall Street, higher costs are expected to continue to cut into the big-box retailer’s margins. Shares were down more than 20% in premarket trading.

Target’s first-quarter adjusted earnings per share came in at $2.19, missing estimates of $3.06 per share, according to Bloomberg data. However, like fellow retail giant Walmart, sales still beat estimates for the quarter, with same-store sales rising 3.3% versus expectations for a 1.17% increase.

For the full year, Target now expects its full-year operating margin to be “in the range of around 6%,” the company said in its earnings statement. That compares with an operating income margin previously thought to be at least 8% this year.

“Throughout the quarter, we faced unexpectedly high costs, driven by a combination of factors, that resulted in profitability well below our expectations and well below our expected long-term operating levels,” Target CEO Brian Cornell said in a press statement. “Despite these near-term challenges, our team remains passionately committed to serving our guests and meeting their needs, which gives us confidence in our long-term financial algorithm. , revenue is expected to grow by the mid-single digit and operating margin is 8% or higher over time.”

6:10 p.m. ET Tuesday: Stock futures continue to fall

Here’s where the market trades on Tuesday night:

  • S&P 500 futures (ES=F): +9.5 points (+0.23%) to 4,094.25

  • Dow futures (YM=F): +67 points (+0.21%) to 32,648.00

  • Nasdaq Futures (NQ=F): +27 points (+0.21%) to 12,587.25

NEW YORK, NY - MAY 12: Traders work on the floor of the New York Stock Exchange (NYSE) on May 12, 2022 in New York City. The Dow Jones Industrial Average fell in early trade as investors continued to worry about inflation and other global issues.  (Photo by Spencer Platt/Getty Images)

NEW YORK, NY – MAY 12: Traders work on the floor of the New York Stock Exchange (NYSE) on May 12, 2022 in New York City. The Dow Jones Industrial Average fell in early trade as investors continued to worry about inflation and other global issues. (Photo by Spencer Platt/Getty Images)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.

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