By Wallace Witkowski and Anora Mahmudova, MarketWatch
Lowe's shares slump after earnings miss
U.S. stocks traded lower Wednesday, with the main indexes
undoing some of the solid gains from the previous session as
investors turned their attention to the Jackson Hole, Wyo., meeting
of global central bankers.
The Dow Jones Industrial Average was down 63 points, or 0.3%, to
21,837, with shares of Home Depot Inc.(HD) and Johnson &
Johnson Inc.(JNJ) leading decliners.
On Tuesday the blue-chip index rallied almost 200 points for its
biggest gain since April 25
(http://www.marketwatch.com/story/dow-sp-set-for-2nd-day-of-gains-as-rebound-continues-2017-08-22),
after reports President Donald Trump is making progress in shaping
a plan for tax reform. Still, even with Tuesday's rally, the Dow
has not gained 1% or more in a single day since April 25, it's
longest streak without a 1% or more gain since March 2007
(http://www.marketwatch.com/story/dow-industrials-on-pace-to-log-longest-streak-without-a-1-gain-in-about-1012-years-2017-08-23),
according to Dow Jones data.
The S&P 500 index fell 8 points, or 0.3%, to 2,445, with
eight out of its 11 main indexes trading lower.
Consumer-discretionary and industrial shares were leading the
losses, down 1% and 0.8%, respectively.
The technology-laden Nasdaq Composite Index declined 25 points,
or 0.4%, to 6,273.
Trading volumes were still light with 1.49 billion shares
exchanging hands on the New York Stock Exchange, and 857 million
shares on the Nasdaq by midday. August average daily volumes are
well below their average for the year. Month to date, average daily
volume for the NYSE is 3.16 billion shares and 1.84 billion shares
for the Nasdaq, according to Dow Jones data.
Wednesday's modest bout of selling could be partly due to
controversial comments from President Trump, who late Tuesday said
that he's ready to shut down the government to win funding for a
border wall with Mexico
(http://www.marketwatch.com/story/trump-threatens-shutdown-over-border-wall-funding-predicts-end-of-nafta-2017-08-22).
See:Trump 'shutdown' threat rattles stock market
(http://www.marketwatch.com/story/trump-shutdown-threat-rattles-stock-market-2017-08-23)
Trump, during a rally with his supporters in Phoenix, also
warned of the possible termination of the North American Free Trade
Agreement.
"You've got a combination of not a lot of data before Jackson
Hole and low volume with optimistic views reversing with some of
the president's comments," said Bill Stone, global chief investment
strategist at PNC Asset Management Group, in an interview.
"It's very difficult to forecast how political machinations are
running," Stone said. "We'll still see a tax cut because the
Republican congress has to show some progress. I think it's easier
to coalesce around tax cuts, but normally, optimism one day, leads
to disappointment the next."
Some analysts suggested that investors are more concerned about
interest rates than political turmoil emanating from
Washington.
Read:Do stock-market investors really care about Gary Cohn and
the Trump agenda?
(http://www.marketwatch.com/story/do-stock-market-investors-really-care-about-gary-cohn-and-the-trump-agenda-2017-08-22)
"Markets have been inured to the dysfunction in the
administration. But people are waking up to the fact that interest
rates, used as discount rates to calculate future cash flows, are
rising. It is just math that with higher discount rates multiples
would have to come down," said Kim Forrest, senior analyst and
portfolio manager at Fort Pitt Capital Group.
Forward multiple or price-to-earnings ratio, a measure of equity
values, of the S&P 500 are at 17.4 times, representing the
highest level in more than a decade, according to FactSet.
Jackson Hole: The impending Kansas City Federal Reserve Bank's
central-bank symposium in Wyoming is now only one day away. A
dearth of potential trading cues has refocused investor attention
on the meeting, which starts Thursday and runs through
Saturday.
"The conference comes at a critical moment for central banks,
especially the ECB and Fed," said Neil Wilson, senior market
analyst at ETX Capital, in a note.
Fed Chairwoman Janet Yellen and European Central Bank President
Mario Draghi are among top speakers on Friday, with investors
hoping to get hints on the future monetary policy path from both
institutions.
"After years of accommodation, the dial is shifting, albeit
glacially," Wilson said. "We're about to enter uncharted water:
unwinding QE has never been done before, but it's about to be tried
on markets that have this year exhibited a degree of calm that is
worrisome when you consider what may be coming."
See:Here's what investors will be watching when Draghi, Yellen
speak at Jackson Hole
(http://www.marketwatch.com/story/heres-what-investors-will-be-watching-when-draghi-yellen-speak-at-jackson-hole-2017-08-22)
The greenback pulled back on Wednesday in anticipation of the
event, with the ICE Dollar down 0.4% at 93.20.
Economic news: The purchasing managers index fell to 52.5, a
two-month low in August, while services business activity index
rose to 56.9, the highest level in 28 months. Separately, a reading
of new homes sales fell 9.4% in July.
Dallas Fed President Robert Kaplan was scheduled to speak at the
Permian Basin Petroleum Association Membership Luncheon in Midland,
Texas at 1:05 p.m. Eastern.
See:MarketWatch's economic calender
(http://www.marketwatch.com/economy-politics/calendars/economic)
Stock movers: Shares of Lowe's Cos. (LOW) fell 6.1% after the
home-improvement retailer reported adjusted earnings and revenue
that missed forecasts
(http://www.marketwatch.com/story/lowes-shares-slide-6-as-company-guides-lower-but-analysts-see-big-upside-2017-08-23).
U.S.-listed shares of WPP PLC (WPP.LN) plunged nearly 12% after
the advertising giant cuts its growth outlook after a drop in
revenue
(http://www.marketwatch.com/story/wpp-cuts-growth-view-as-client-spending-drops-2017-08-23).
Similarly, shares of rivals Omnicom Group Inc.(OMC) fell 5.5% and
Interpublic Group of Cos.(IPG) dropped 4.9%.
Coty Inc.(COTY) shares fell further Wednesday, down 5.1%, after
the beauty products company reported weak results on Tuesday
(http://www.marketwatch.com/story/coty-shares-fall-after-earnings-miss-2017-08-22).
Salesforce.com Inc.(CRM) rose 0.2% after the cloud-software
company late Tuesday reported earnings that were better than
expected
(http://www.marketwatch.com/story/salesforce-beats-on-earnings-and-increases-guidance-but-stock-falls-2017-08-22).
Shares of Intuit Inc. (INTU) fell 2.4% after the financial
software provider late Tuesday reported earnings that beat
forecasts
(http://www.marketwatch.com/story/intuit-stock-down-after-hours-on-fourth-quarter-earnings-and-cfo-change-2017-08-22),
but also said its Chief Financial Officer R. Neil Williams will
step down in January.
After Wednesday's closing bell, HP Inc.(HPQ) and PVH Corp.(PVH)
are slated to report.
Other markets: There was no trading in Hong Kong, with the Hang
Seng Index halted as category-10 Typhoon Hato slammed into the area
(http://www.marketwatch.com/story/hong-kong-stock-market-closed-as-severe-typhoon-hits-2017-08-23).
Other Asian stock markets
(http://www.marketwatch.com/story/asian-markets-gain-despite-jackson-hole-uncertainties-2017-08-22)
closed mostly higher. European equities finished lower
(http://www.marketwatch.com/story/european-stocks-tilt-lower-even-as-factory-activity-stays-strong-2017-08-23).
Oil prices
(http://www.marketwatch.com/story/oil-prices-slide-as-confusion-over-libyan-production-reigns-2017-08-23)
rose 0.9% after a decline in U.S. crude supplies, while gold
(http://www.marketwatch.com/story/gold-higher-as-dollar-nicked-by-economic-agenda-uncertainty-2017-08-23)prices
advanced 0.3%.
--Sara Sjolin in London contributed to this report.
(END) Dow Jones Newswires
August 23, 2017 13:57 ET (17:57 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.