Wall Street trending down after disappointing retail numbers

Target reported a significant drop in earnings a day earlier, hinting at potential troubles in the retail market.

NEW YORK — Wall Street pointed to declines before the market open on Wednesday after Target reported a huge drop in earnings on the same day that US retail sales data for July was released.

Futures for the S&P 500 fell 0.8% and futures for the Dow fell 0.6%.

Target slipped nearly 2% after reporting a nearly 90% fall in second-quarter earnings as the company was forced to cut prices to shed unwanted inventory.

Target earlier this summer warned against canceling orders from suppliers and aggressively slashing prices as Americans saw a significant shift in spending amid the pandemic.

The US Commerce Department is due to release retail sales data for July on Wednesday, with economists polled by FactSet expecting modest 0.2% growth from June, when sales rose 1%.

Analysts warned that major risks remain, such as: B. Rising COVID-19 cases in some countries in Asia, along with concerns about global inflation and China’s infection control policies.

“Expectations for economic growth in China and the US will likely remain the key to assessing recession fears. China’s ‘zero-COVID’ policy is still a major headwind for global growth,” said ActivTrades’ Anderson Alves.

Japan’s benchmark Nikkei 225 gained 1.2% to close at 29,222.77. Australia’s S&P/ASX 200 rose 0.3% to 7,127.70. South Korea’s Kospi slipped 0.5% to 2,521.84. Hong Kong’s Hang Seng was up 0.5% to 19,922.45, while the Shanghai Composite was up 0.5% to 3,292.53.

In Europe, France’s CAC 40 fell 0.6% in midday trade, while Germany’s DAX fell 1.2%. The UK FTSE 100 lost 0.4%

In New Zealand, the central bank raised its benchmark interest rate to 3% from 2.5% as it continues to try to fight inflation. The Reserve Bank of New Zealand said domestic spending has remained resilient amid local and global headwinds and employment is resilient. Lower oil prices have given inflation some respite, the bank said, but it needs to tighten monetary conditions further until inflation is brought back to its target range of 1% to 3%.

New Zealand’s inflation is 7.3% and unemployment is 3.3%.

In Japan, government data showed a trade deficit in July for the 12th consecutive month. Rising oil prices and falling yen were key factors. Japan imports almost all of its oil.

New COVID-19 cases have risen sharply in recent weeks as restrictions on economic activity ease. Ambulances had to circle for hours looking for hospitals that could take patients. But travel and domestic shopping appear to be back, boosting consumption.

The market’s recent swings came as traders cautiously reviewed the mostly encouraging financial results from major US retailers. US stocks had their best month in a year and a half in July and the winning streak has continued into August, partly on hopes that inflation is easing. The latest government consumer price report showed that inflation essentially stalled in June-July.

The latest results from retailers show that spending remains solid even as American consumers face the hottest inflation in 40 years. Wall Street was concerned that higher prices for everything from groceries to clothing could ultimately slow the economy’s key growth driver, consumer spending.

The latest retail reports cap the latest round of corporate earnings, which have been closely watched by investors trying to gauge the impact of inflation on businesses and consumers while attempting to gauge how the US Federal Reserve will react.

The central bank is raising interest rates to slow economic growth and curb inflation, although it risks slamming on the brakes too hard and pushing the economy into recession.

In July, the Fed raised its key interest rate by three-quarters of a point for the second time in a row. On Wednesday, Wall Street will learn more details about the process behind that decision when the Fed releases minutes from that meeting. According to CME’s FedWatch tool, investors are expecting a half-point hike at the Fed’s upcoming August meeting.

In energy trading, the reference price for US crude fell 6 cents to $86.47 a barrel. US crude prices fell 3.2% on Tuesday. Brent crude, the international standard, fell 47 cents to $91.87 a barrel.

In forex trading, the US dollar rose to 135.08 Japanese yen from 134.22 yen. The euro cost $1.0166 compared to $1.0171.

https://www.king5.com/article/news/nation-world/wall-street/507-dbb3076c-f6c3-435e-b2d8-55e82ef5a4cd Wall Street trending down after disappointing retail numbers

Alley Einstein

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