By Mark DeCambre and Chris Matthews, MarketWatch
Retailers' quarterly results offer more evidence of consumer
strength
Stocks gained at the start of trade 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 rose 218 points, or 0.9%, to
26,178, the S&P 500 index climbed 23 points, or 0.8%, to 2,924,
while the Nasdaq Composite index climbed 64 points, or 0.8%, to
8,012.
On Tuesday
(http://www.marketwatch.com/story/us-stock-futures-edge-lower-threaten-to-snap-dows-three-day-win-streak-2019-08-20),
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.
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?
Results from retail giants buoyed investor sentiment Wednesday,
after Target Corp.'s shares (TGT) appeared set to hit a record high
(http://www.marketwatch.com/story/targets-stock-surges-toward-record-high-after-profit-and-sales-beats-raised-guidance-2019-08-21)
following the discount retailer's report of fiscal second-quarter
earnings and sales that beat expectations. Similarly
home-improvement retailer
(http://www.marketwatch.com/story/lowes-tops-forecast-with-rise-in-second-quarter-profit-2019-08-21)Lowe's
Cos. (LOW) 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) on Tuesday, helped to quell, for the moment, worries that
the domestic economy, buffeted by a China-U.S. trade policy clash,
is set to soon enter recession.
A key focus for investors on the session, however, will be on
the Fed minutes set to be released at 2 p.m. Eastern Time
Wednesday.
The minutes and a Fed 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 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
(https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html).
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.
The FOMC minutes will be a particular focus after President
Donald Trump renewed his criticism of the Fed on Tuesday, saying,
"If the Fed would do its job, we'd have a tremendous spurt of
growth," he said in remarks alongside the president of Romania at
the White House on Tuesday afternoon
(http://www.marketwatch.com/story/trump-says-white-house-looking-at-payroll-tax-cut-urges-fed-rate-cut-2019-08-20).
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. The White House had previously said
(http://www.marketwatch.com/story/trump-says-white-house-considering-tax-cuts-as-he-rejects-recession-worries-2019-08-20)
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.
Abroad, investors were focused on political developments in
Italy after the emergence of a potential center-left coalition
government appeared to lower the chances
(https://www.politico.eu/article/italy-election-salvini-center-left-greenlights-potential-coalition-with-5stars/)
of a snap election following the resignation of Prime Minister
Giuseppe Conte Tuesday. Bond yields in the region, which move
inversely to prices, lower. The yield on 10-year Italian government
debt fell 4 basis points to 1.318%
Which stocks are in focus?
Shares of Target (TGT) rose 16.9% Wednesday after issuing
quarterly results.
Lowe's Cos's(LOW) stock surged 12.5% in early trade.
Shares of Analog Devices Inc. (ADI) fell 1.2%, 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 3 basis points
to 1.584%.
Stocks in Asia traded mixed overnight, as China's CSI 300 fell
0.2%, Hong Kong's Hang Seng Index gained 0.2% and Japan's Nikkei
225 shed 0.3%.
In Europe, stocks traded higher, with the Stoxx Europe 600
climbing by about 1.3%. Italy's FTSE MIB Index was up 2% on
Wednesday, while the exchange-traded iShares MSCI Italy (EWI) is up
0.7% so far this week.
In commodities markets, the price of crude oil
(http://www.marketwatch.com/story/oil-price-rally-takes-a-breather-after-mondays-big-gains-2019-08-20)
was rising 0.9% to $56.67 a barrel, while gold prices traded 0.3%
lower
(http://www.marketwatch.com/story/gold-prices-edge-higher-as-bond-yields-slide-2019-08-20).
The U.S. dollar , meanwhile, was flat relative to its major trading
partners.
(END) Dow Jones Newswires
August 21, 2019 09:46 ET (13:46 GMT)
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