Stocks Slip on Disappointing Retail Earnings
November 19 2019 - 12:02PM
Dow Jones News
By Anna Isaac and Paul Vigna
U.S. stocks broke off their record pace Tuesday after a round of
weak earnings reports from retailers.
The Dow Jones Industrial Average fell 0.4% to 27920. The S&P
500 dropped 0.2%, and the Nasdaq Composite lost 0.1%. All three
indexes closed at records Monday.
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 over-stretched."
Shares of retailers were among the biggest decliners in
Tuesday's session as the group began reporting third-quarter
earnings. Dow component Home Depot shares fell 4.8%, after the
retailer trimmed its expectations for sales growth. Shares of
Kohl's dropped 18% after it lowered its profit guidance for the
year. That is its worst one-day drop since January 2017.
The disappointing outlook from both companies weighed on the
stocks of other U.S. retailers, as investors grew concerned about
the health of a sector that has been strong so far this year.
Macy's, which is scheduled to report earnings later in the week,
fell 11% while Nordstrom declined 6.3%. Gap slumped 3.8%.
Meanwhile, discount retailer TJX rose 1% after its earnings
report showed a strong rise in sales.
Even though the main focus in Washington was the ongoing
impeachment hearings, traders said they were also concerned about a
bill in the Senate in support of Hong Kong protestors, and how it
might affect the ongoing negotiations over a U.S.-China trade deal.
The bill, if passed, would allow for sanctions against anyone found
violating Hong Kong's autonomy.
A vote on the bill, which has been put on an expedited schedule,
could happen as soon as Tuesday.
"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 and the prospects for a
U.S.-China trade deal in the absence of fresh shocks. 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
0.2%.
"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 has pared back most of those losses in
the hours since.
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 1.783%, from
1.808% on Monday.
In commodities, U.S. crude futures fell 2.4% on concerns about
excess oil supplies.
Write to Anna Isaac at anna.isaac@wsj.com and Paul Vigna at
paul.vigna@wsj.com
(END) Dow Jones Newswires
November 19, 2019 11:47 ET (16:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.