Stocks Slip on Disappointing Retail Earnings
November 19 2019 - 5:02PM
Dow Jones News
By Paul Vigna and Anna Isaac
The Dow Jones Industrial Average and S&P 500 pulled back
from record levels Tuesday, sidetracked by weakness in shares of
Home Depot and other retailers.
The blue-chip index lost 102.20 points, or 0.4%, to 27934.02.
The S&P 500 slipped 1.85 points, or 0.1%, to 3120.18. The
Nasdaq Composite rose 20.72 points, or 0.2%, to a record of
8570.66.
A drop here isn't really a surprise, said Nick Reece, senior
analyst at Merk Investments. "We've seen sentiment get pretty
optimistic," he said. "It's probably a little overstretched."
Shares of retailers were among the biggest decliners in
Tuesday's session as the sector's third-quarter reporting season
ramped up. Dow component Home Depot dropped $12.99, or 5.4%, to
$225.86 after cutting its earnings outlook following a
disappointing third quarter.
Shares of Kohl's dropped $11.38, or 19%, to $47.02 -- their
biggest single-day drop since going public in 1992 -- after the
department-store operator lowered its profit guidance for the
year.
Home Depot was the worst performer in the Dow, both in dollar
and percentage terms. Kohl's was the worst performer in the S&P
500 by percentage loss.
The disappointing outlook from both companies weighed on the
stocks of other U.S. retailers, too, as investors grew concerned
about the health of the sector. Macy's, which is scheduled to
report earnings later in the week, fell $1.84, or 11% to $15.04,
while Nordstrom declined $2.37, or 6.3%, to $35.50. Gap slumped 52
cents, or 3% to $16.78.
Meanwhile, discount retailer TJX rose $1.09, or 1.8%, to $60.64
after its report showed a strong rise in sales.
Traders also had an eye on Washington, but not necessarily for
the main event.
Even though the top focus in the capital was the continuing
impeachment hearings, traders said they were also concerned about a
bill in the Senate in support of Hong Kong protesters, and how it
might affect the continuing negotiations over a U.S.-China trade
deal. The bill, if passed, would allow for sanctions against anyone
found violating Hong Kong's autonomy.
"Some feel traders are concerned that a Senate vote on Hong Kong
could blow up chance of trade deal," said Art Cashin, who runs
UBS's floor operations at the NYSE.
Globally, stocks edged higher as investors grew less
apprehensive about the economic outlook. Hong Kong's Hang Seng
Index ended the day up almost 1.6%, while the Shanghai Composite
gauge advanced 0.9%.
Meanwhile, the pan-continental Stoxx Europe 600 index fell
0.1%.
"Markets were thinking a recession was imminent at the end of
August, now people are discovering that it is less bad than that,"
said Florian Ielpo, head of macroeconomic research at
asset-management firm Unigestion. "Pessimism is starting to
fade."
The ICE dollar index, which tracks the greenback against a
basket of currencies, dropped sharply immediately after President
Trump said he met with Federal Reserve Chairman Jerome Powell at
the White House Monday and "protested" about U.S. interest rates
being too high. The gauge later erased those losses.
Mr. Trump, who has been vocal in his criticism of the central
bank, tweeted that he discussed the state of the economy, trade
issues, and the impact of a "too strong" dollar with the central
bank chief. The Fed said Mr. Powell reiterated that he hoped
interest-rate cuts earlier this year would bolster the economy.
The yield on the U.S. 10-year Treasurys slipped to 1.785% from
1.808% on Monday. In commodities, U.S. crude futures fell 3.2% to
$55.21 a barrel on concerns about excess oil supplies.
Write to Paul Vigna at paul.vigna@wsj.com and Anna Isaac at
anna.isaac@wsj.com
(END) Dow Jones Newswires
November 19, 2019 16:47 ET (21:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.