Market Snapshot: Dow opens with 280 point climb as investors parse upbeat earnings from Target, Lowe’s and await Fed minutes

On Tuesday, the Dow fell 390.51 points, or 1.6%, to end at 24,206.86, near a session low, while the S&P 500 index shed 30.97 points, or 1.1%, to finish at 2,922.94. The Nasdaq Composite Index  declined 49.72 points, or 0.5%, to close at 9,185.10.

The Nasdaq is only a few percentage points away from its all-time record high, supported by recent strength in technology and internet stocks during the coronavirus pandemic.

What’s driving the market?

The latest batch of quarterly results from retailers has underscored some resilience among the biggest companies amid the coronavirus pandemic.

Lowe’s Cos. LOW, +0.73% reported sales and profit significantly above expectations, while Target Corp. TGT, -0.96% beat estimates on revenue and sales growth, with digital sales soaring 141%.

That has helped to drive buying appetite on Wednesday, in a marketplace that has been vulnerable to pullbacks after the main benchmarks managed to retrace much of the losses suffered in March over the past few weeks.

On Tuesday, the fragility of the recent gains for the indexes was on full display as a lackluster session turned into a nearly 400-point downturn for the Dow, following a report from Stat News that offered a more sober view of phase-one results from Moderna Inc.’s MRNA, -1.89% coronavirus vaccine candidate.

Hope for a remedy for the deadly pathogen has been viewed as one of the key elements necessary for the coronavirus-stricken economy to stage a bona fide recovery in the second half of 2020 without fear of a fall or winter reprisal of the viral outbreak, experts have said.

Investors, meanwhile, appear to be focusing on the positives and directing their attention to wider reopening plans that are taking place throughout the U.S.

Many U.S. states are lifting restrictions on business and personal activity ahead of the Memorial Day holiday next Monday, and parts of New York state were reopening after Gov. Andrew Cuomo said the outbreak is back to where it started before it took off in late March.

See: U.S. states reopen after coronavirus lockdowns:

Still, investors may have to contend with a long, uneven road toward recovery from prospective recession.

The Congressional Budget Office said it is projecting GDP to fall 38% in the second quarter, a forecast roughly in line with Wall Street economists, and for the federal budget deficit to hit $2.1 trillion in the fiscal 2020 ending on September 30.

Treasury Secretary Steven Mnuchin, testifying via videoconference in front of the Senate Banking Committee on Tuesday along with Federal Reserve Chairman Jerome Powell, said that delaying reopening could hurt the vitality of America. “There is the risk of permanent damage,” he said. However, Powell said that it’s important to the economy that American’s feel safe. “The No. 1 thing, of course, is people believing that it’s safe to go back to work so they can go out,” the Fed boss said.

“If we don’t get the public health right, there’s a limit to how much we’re going to be able to do to solve that problem,” Boston Fed President Eric Rosengren told MarketWatch in an interview on Tuesday.

Although a number of Fed officials have already spoken, including Powell, investors might look to parse minutes from the policy-setting Federal Open Market Committee’s April 28-29 meeting due at 2 p.m. Eastern for further insights on the central bank’s outlook.

Which stocks are in focus?

• Urban Outfitters Inc.’s URBN, -5.38% quarterly results fell well short of Wall Street estimates. The company reported a preliminary first-quarter loss of $138.4 million, or $1.41 a share, compared with net income of $32.6 million, or 31 cents a share, in the year-ago period. Shares were off 3.3%.
• Tesla Inc. TSLA, +1.67% shares were up 1.5% Wednesday as the electric-vehicle maker said it will raise the price of the “full self-driving” option on its electric vehicles worldwide by $1,000 starting July 1, the company said.
• Luckin Coffee Inc. LK, -31.88% is scheduled to resume trading Wednesday, Nasdaq Inc. NDAQ, +2.24% said late Tuesday. Nasdaq halted trading of the company’s stock April 7. Luckin Coffee received a delisting notice from the exchange platform May 15 because of “public interest concerns” related to “fabricated” transactions disclosed by the company in its annual report. Its shares tumbled 40%.
• Johnson & Johnson Inc. JNJ, +0.36% said late Tuesday it will stop selling talc-based baby powder in North America following a flurry of lawsuits alleging the product causes cancer. Shares edged up 0.5%.
• Shares of Lowe’sjumped 3.4% Wednesday, after the home improvement retailer reported fiscal first-quarter profit and sales rose well above expectations, and said the sales momentum has continued into May.
• Targetbeat first-quarter earnings and revenue expectations with help from its digital sales capabilities as e-commerce grew by 141% during the period.
• L Brands Inc. LB, -3.15% Take-Two Interactive Software Inc. TTWO, +2.74% and Expedia Group Inc. EXPE, +2.29% slated to report after the end of Wednesday’s regular session.
• Spotify Technology S.A. shares SPOT, +5.75% were in focus after the audio-streaming company announced a podcast deal with Joe Rogan.
• Clorox Co. CLX, +1.31% said its board has approved a 5% increase in its quarterly dividend to $1.11 a share from $1.06.
• Shares of McKesson Corp. MCK, -0.45% dropped Wednesday, after the retail pharmacy and health care services company reported fiscal fourth-quarter earnings that beat expectations, but provided a downbeat earnings outlook citing “anticipated headwinds” as a result of the COVID-19 pandemic.
• Shares of Inovio INO, +8.78% gained 22.8% on Wednesday after the company said its COVID-19 vaccine candidate demonstrated neutralizing antibodies in animals.
• Shares of Aurora Cannabis Inc. ACB, -15.56% have gained as investors have overlooked its negative Ebitda and focused on better-than-expected revenue, wrote analysts Rahul Sarugaser and Michael Freeman.
• Shares of Royal Caribbean Cruises Ltd. RCL, +1.18% surge Wednesday, after the cruise operator swung to a first-quarter loss that was wider than expected as the COVID-19 pandemic led to cruise suspensions, but said 2021 bookings remained within historical ranges.

How are other markets trading?

U.S. government bond yields were neutral, with the 10-year Treasury note TMUBMUSD10Y, 0.710% little-changed at 0.71% on Wednesday. Bond prices move inversely to yields.

The U.S. dollar weakened against a basket of its major rivals, with the ICE U.S. dollar index DXY, -0.25% trading down 0.3%.

In precious metals, gold futures for June delivery GCM20, +0.38% rose $5.60, or 0.3%, at $1,551.20 an ounce. Crude prices for July delivery CLM20, +1.69% CL.1, +4.69% added 83 cents, or 2.6%, to trade at $32.79 a barrel.

In global equities, the Stoxx Europe 600 index SXXP, +0.35% was gaining 0.3%, while the FTSE 100 UKX, +0.45% edged up 0.4%. In Asia trade, Japan’s Nikkei NIK, +0.79% rose 0.8%, Hong Kong’s Hang Seng HSI, +0.04% advanced less than 0.1%, the Shanghai Composite Index SHCOMP, -0.51% closed down 0.5%, as did the CSI 300 Index 000300, -0.53%.