It was retail therapy for the US market as stocks such as Target, Urban Outfitters and Gap lead the S&P 500 higher and investors shrug off latest Fed minutes.
- Fed minutes show low inflation a concern
- Trump disbands advisory councils as CEOs exit in protest, attacks Amazon
- Retail stocks swing-back
Indexes pared gains as the Dow edged up +0.12%, while the S&P 500 went up +0.14% and Nasdaq climbed +0.19%. Apparel and specialty retailers pulled along the S&P 500 with groups up +1.97% and +1.34% respectively. On Tuesday, specialty retailers such as Dick's Sporting Goods and Advanced Auto Parts saw their stock price plunged to record levels on earnings misses.
- Dow 22,005 +0.12%
- S&P 500 2,468 +0.14%
- Nasdaq 6,345 +0.19%
- Russell 2000 1,382 -0.05%
- NYSE Composite 11,866 +0.19%
- Gold 1,288 +0.65%
- Oil WTI $46 -1.60%
- 10-Year Treasury Yield 2.23% -0.03%
Dollar slips on Fed minutes
The dollar sank after Federal Reserve minutes showed policymakers were worried about low inflation and on President Trump's tweet that he would disband the much heralded advisory councils after more CEOs resign.
Inflation has not risen above the 2% target in more than five years and minutes show policymakers split over timing of further rate increases heightening market concern that a rate increase this year may not be on the cards.
The dollar took back gains and fell against a number of currencies and the Wall St Journal Dollar Index -0.37%. The dovish tone of Fed minutes helped US government bonds regain momentum after declines early this week and yields were higher on Wednesday at 2.23% against 2.25% on Tuesday. Yields fall when bond price rises.
Retailers on an upswing
Retailers such as Advanced Auto Parts had lost their footing on Tuesday on earnings misses and saw stock price recover up +5.09%. Adding shine to the sector was Target up +3.61% and Urban Outfitters up +17.48% after beating expectations for second-quarter earnings.
Bricks and mortar retailers altered the dismal drum beat that has marked the sector given the threat of Amazon and its purchase of Whole Foods. Target saw net income rise to $1.22 per share against $1.16 per share over the same period last year. Adjusted earnings per share of $1.23 was ahead of estimates of $1.19 a share.
Target also raised its adjusted earnings guidance to $4.34 to $4.54 a share against earlier guidance of $3.80 to $4.20.
Urban Outfitters still saw a surge in its share price on profits beat. Although Urban's profit declined to 44 cents a share from 66 cents over the same period last year, it beat estimates of 37 cents a share. Revenue slipped 2% to $873m but was still higher than the consensus estimate of $862m.
All in a day's work as Trump attacks Amazon and ends business councils
President Trump tweeted on Wednesday that he was ending two of his business councils - the Manufacturing Council and the Strategic and Policy Forum. This followed reports that the Strategic and Policy Forum led by Blackstone Group chief executive, Stephen Schwarzman was going to disband following a conference call of its executives.
The news follows Tuesday's explosive press conference where he "doubled down" on his assertion that both sides were responsible for violence over the weekend in Charlottesville, VA.
A string of CEOs have resigned since the start of the week led by CEO of Merck, Kenneth Frazer followed successively by Under Armour and Intel. The news of the demise of Trump's business panels shook investor sentiment about the passage of Trump's tax agenda.
Trump also took to twitter to attack Amazon "is doing great damage to tax-paying retailers" and causing job losses. A stance that drew some praise from the media as having some basis in truth and possible support from states.