By Chris Matthews and Mark DeCambre, MarketWatch
Home Depot shares buoy the Dow
U.S. stocks headed modestly lower Tuesday morning as investors
contend with worries about the strength of the U.S. economy and
earnings news from some of the last remaining major companies to
report for the second quarter, including Dow component Home
Depot.
How are the major benchmarks faring?
The Dow Jones Industrial Average fell 101 points, or 0.4%, at
26,036, the S&P 500 index lost 17 points, or 0.6% to 2,905,
while the Nasdaq Composite Index fell 40 points, or 0.5%, to reach
7,963.
On Monday, the Dow rose 249.78 points, or 1%, to end at
26,135.79, while the S&P 500 index added 34.97 points, or 1.2%,
to close at 2,923.65. The Nasdaq Composite Index advanced 106.82
points, or 1.4%, to finish at 8,002.81.
A fourth consecutive gain for the Dow and the S&P 500 would
represent those indexes' longest since the period ended July
15.
Read:Stock-market investors rattled by bond market's 'warning
shot'--here's what's next
(http://www.marketwatch.com/story/stock-market-investors-rattled-by-bond-markets-recession-warning-heres-whats-next-2019-08-17)
What's driving the market?
U.S. stocks struggled for altitude Tuesday, with investors
digesting earnings
(http://www.marketwatch.com/story/home-depot-warns-lumber-prices-possible-tariffs-to-weigh-on-sales-2019-08-20)
from Home Depot Inc.(HD), which warned that lumber price deflation,
as well as the impact of possible tariffs, will impact its fiscal
year sales.
Home Depot still beat analyst expectations for second-quarter
earnings, posting net income of $3.17 per share, while same-store
sales rose 3%. The firm issued somewhat disappointing full-year
sales guidance of 2.3%, versus forecasts of 2.8%. The stock rose
3.6% early Tuesday.
Home Depot earnings come a day after the U.S. Commerce
Department said it has given Chinese telecom giant Huawei
Technologies Co. Ltd. another 90-day reprieve during which it can
continue to do business with American companies, without the
granting of case-by-case licenses that would otherwise be needed,
after the Commerce Department added it to its "entity list" in May
(http://www.marketwatch.com/story/stock-futures-slip-after-trump-appears-to-crack-down-on-chinas-huawei-2019-05-16).
Meanwhile, President Donald Trump on Monday leveled fresh
criticism against the Federal Reserve, asking that the central bank
consider deeper cuts to key interest rates, of around 1%. Trump
did, however, declare the U.S. economy in good shape, despite the
trade clash with China, which economists and many executives from
American companies highlight as a problem for business planning,
one that could throw the U.S. into a recession. "We're doing
tremendously well. Our consumers are rich. I gave a tremendous tax
cut and they're loaded up with money," Trump said on Monday.
Stock-market investors have been focused on what the bond-market
has been communicating about the overall health of the economy.
Longer-term bond yields briefly fell below short term yields last
week, adding to concerns about the health of the economy. Such
yield-curve inversions have preceded the past seven recessions
though often with a significant time lag.
"We see a mixed trading session as the movement in yields
suggest the bond market is not convinced of the administrations
pitch to dampen recession fears," said Peter Cardillo, chief market
economist at Spartan Capital Securities in a Tuesday research
note.
Check out: Stocks could fall another 8% as 'Trump put' and 'Fed
put' expire, says Morgan Stanley's Mike Wilson
(http://www.marketwatch.com/story/the-fed-trump-puts-have-expired-says-morgan-stanleys-mike-wilson-leaving-stocks-vulnerable-to-another-8-decline-2019-08-19)
The 10-year Treasury note's yield was down about 5 basis points
Tuesday to 1.550%, while the 2-year Treasury note yielded 1.496%,
down three basis points.
Potentially weighing on technology shares is a report that as
many as 20 states attorneys general will launch a joint antitrust
investigation of large technology firms, according to the Wall
Street Journal
(http://www.marketwatch.com/story/states-preparing-joint-antitrust-investigation-of-big-tech-2019-08-19).
This comes after Justice Department announced a separate antitrust
review of the tech firms, which reportedly include Google parent
Alphabet Inc. (GOOGL) and Facebook Inc. (FB), among others.
Looking ahead, investors will watch for comments from Fed
officials later in the day, including San Francisco Federal
President Mary Daly, who will speak at 4 p.m. at an online
question-and-answer session, and Federal Gov. Vice Chairman for
Supervision Randal Quarles, who is slated to speak at 6 p.m.
Those speeches come ahead of the publication of the minutes from
the most recent Fed gathering on July 31, which concluded with the
first interest-rate cut in more than a decade. A gathering of
central bankers in Jackson Hole
(http://www.marketwatch.com/story/investors-might-be-disappointed-in-feds-message-from-jackson-hole-2019-08-16)
that starts on Thursday will also be in focus.
Which stocks are in focus?
Shares of Kohl's Corp. (KSS) fell 1.2% Tuesday morning, after
the retailer reported
(http://www.marketwatch.com/story/kohls-stock-rises-after-earnings-and-sales-beat-2019-08-20)
second-quarter profits and revenues that beat Wall Street
expectations.
Medtronic Plc(MDT) stock rose 3.4%, after issuing the medical
technology company beat analyst expectations for fiscal-fourth
quarter earnings and sales
(http://www.marketwatch.com/story/medtronics-stock-surges-toward-record-after-earnings-beat-raised-outlook-2019-08-20),
while raising its full-year outlook.
U.S.-traded shares of Sea Ltd. (SE) tumbled 9% Tuesday, after
the online gaming company reported second-quarter results.
TJX Cos Inc. (TJX) stock fell 3%, after the discount retailer
reported second-quarter revenue
(http://www.marketwatch.com/story/tjmaxx-parent-tjx-stock-slips-after-sales-miss-weak-guidance-2019-08-20)
that fell short of expectations.
Shares of Beyond Meat Inc. (BYND) rallied 5.9%, following an
upgrade of the stock by JPMorgan, which argued that there is
greater potential for the plant-based meat manufacturer to expand
its presence in quick-service restaurants.
How are other markets trading?
Stocks in Asia traded mixed overnight, with China's CSI 300
falling 0.1%, Hong Kong's Hang Seng Index losing 0.2% and Japan's
Nikkei 225 rising 0.6%. In Europe, stocks traded lower, with the
Stoxx Europe 600 dow 0.4%.
In commodities markets, the price of crude oil was roughly flat
at $56 per barrel, while gold prices rose 0.2% to about $1514.5 per
ounce. The U.S. dollar , meanwhile, rose 0.1% relative to its major
trading partners.
(END) Dow Jones Newswires
August 20, 2019 09:51 ET (13:51 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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