Stocks traded sharply higher Wednesday after upbeat quarterly results from some of the nation’s biggest retailers, Target and Lowe’s.
Investors were also awaiting the release of minutes from the Federal Reserve’s July 30-31 policy gathering, which could offer insights on the central bank’s decision last month to cut interest rates for the first time in more than a decade and provide clues on its future path.
How are the major benchmarks faring?
The Dow Jones Industrial Average DJIA, +1.07% rose 288 points, or 1.1%, to 26,249, the S&P 500 index SPX, +0.88% climbed 26 points, or 0.9%, to 2,927, while the Nasdaq Composite index COMP, +0.97% climbed 80 points, or 1%, to 8,028.
On Tuesday, the The Dow declined 173.35 points, or 0.7%, at 25,962.44, the S&P 500 index lost 23.14 points, or 0.8% to 2,900.51, while the Nasdaq Composite Index gave up 54.25 points, or 0.7%, to 7,948.56.
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What’s driving the market?
Results from retail giants buoyed investor sentiment Wednesday, after Target Corp.’s shares TGT, +19.09% set a record high following the discount retailer’s report of fiscal second-quarter earnings and sales that beat expectations. Target Corp. stock soared more than 19% in Thursday trading after its earnings provided analysts with further evidence that a combination of store and online sales is valuable. Similarly home-improvement retailerLowe’s Cos. LOW, +9.87% said its second-quarter net income rose to $1.68 billion, or $2.14 a share, from $1.52 billion, or $1.86 a share, with sales up 0.5% to $20.99 billion.
The results from the likes of Target and Lowe’s and Home Depot Inc. HD, +1.47% on Tuesday, helped to quell, at least temporarily, worries that the domestic economy, buffeted by a China-U.S. trade policy clash, may soon see a recession.
A focus for investors later in the though will be the Fed minutes from its July meeting set to be released at 2 p.m. Eastern Time Wednesday.
The minutes and the Fed’s annual symposium in Jackson Hole, Wyo., set to kick off on Thursday, may provide more clarity to a market that appears convinced that the central bank’s rate-setting committee is inclined to cut interest rates further this year and as early as next month. Wall Street is pricing in a near-certain rate cut on Sept. 18 when the Federal Open Market Committee’s policy gathering concludes based on federal funds futures from the CME Group.
Investors will be watching to determine how other FOMC committee members voted and the thinking behind the two dissenting voters at the last gathering.
“Today’s update will give us an insight into the central bank’s rationale for the rate cut last month. Things have changed since the July Fed meeting, so the update might not provide that much insight,” wrote David Madden market analyst at CMC Markets UK, in a Wednesday note.
President Donald Trump renewed his criticism of the Fed on Tuesday afternoon, saying at meeting with the president of Romania that “If the Fed would do its job, we’d have a tremendous spurt of growth.” On Monday, Trump said the central bank should consider deeper cuts to key interest rates, of around one percentage point which he reiterated on Tuesday.
The president also said Tuesday that he was looking at tax cuts, including cutting payroll taxes, which follows a late-Monday Washington Post report that the administration was considering a temporary payroll tax cut to deal with the threat of an economic slowdown ahead of the 2020 elections. The White House had previously said cutting payroll taxes wasn’t under consideration, and Trump on Tuesday didn’t put any time frame on such a cut. “Payroll taxes is something I have been thinking about. Many people would like to see that,” he said.
On the economic data front, U.S. existing home sales rose by 2.5% to an annual rate of 5.42 million in July, the National Association of Realtors said Wednesday, above the median forecast of 5.40 million, according to a MarketWatch poll of economists.
Abroad, investors were focused on political developments in Italy after the emergence of a potential center-left coalition government appeared to lower the chances of a snap election following the resignation of Prime Minister Giuseppe Conte Tuesday. The yield on 10-year Italian government debt TMBMKIT-10Y, -0.70% fell 2 basis points to 1.333%
Which stocks are in focus?
Shares of Target TGT, +19.09% rose 19.3% Wednesday after issuing quarterly results, and were trading at around $101.31, above its previous record high close of $89.26 and all-time intraday high of $90.39.
Lowe’s Cos’s LOW, +9.87% stock surged 9.9% Wednesday.
Shares of Analog Devices Inc. ADI, +0.00% fell 0.2%, after the semiconductor firm reported a fiscal third-quarter profit and revenue that beat expectations, but provided a mixed fourth-quarter outlook.
How are other markets trading?
The yield on the 10-year U.S. Treasury note rose less than a basis point to 1.562%.
Stocks in Asia traded mixed overnight, as China’s CSI 300 000300, -0.16% fell 0.2%, Hong Kong’s Hang Seng Index HSI, +0.15% gained 0.2% and Japan’s Nikkei 225 NIK, -0.28% shed 0.3%.
In Europe, stocks closed higher, with the Stoxx Europe 600 SXXP, +1.21% climbing 1.2%. Italy’s FTSE MIB Index I945, +1.77% rose 1.9% on Wednesday.
In commodities markets, the price of crude oil CLV19, -0.02% was falling 0.5% to $55.88 a barrel, while gold prices GCZ19, +0.03% traded flat. The U.S. dollar DXY, -0.02%, meanwhile, was flat relative to its major trading partners.
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