Disappointing Home Depot Sales May Weigh On Wall Street

Disappointing Home Depot Sales May Weigh On Wall Street

The major U.S. index futures are pointing to a higher opening on Tuesday, with stocks likely to give back ground after trending higher in recent sessions.

The downward momentum on Wall Street comes as traders react to earnings news from home improvement retailer Home Depot (HD).

Shares of Home Depot are moving notably lower in pre-market trading after the company reported first quarter earnings that beat analyst estimates but weaker than expected sales.

After failing to sustain an early move to the upside, stocks gave back ground over the course of the trading session on Monday. The major averages pulled back well off their best levels of the day but managed to close in positive territory.

The major averages ended the day modestly higher. The Dow rose 68.24 points or 0.3 percent to 24,889.41, the Nasdaq inched up 8.43 points or 0.1 percent at 7,411.32 and the S&P 500 crept up 2.41 points or 0.1 percent to 2,730.13.

The early strength on Wall Street came amid easing trade tensions ahead of a second round of trade talks between the U.S. and China this week.

Ahead of the meeting, President Donald Trump indicated in a post on Twitter that he is working with Chinese President Xi Jinping to get Chinese telecom giant ZTE Corp. “back into business, fast.”

“President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast,” Trump tweeted. “Too many jobs in China lost. Commerce Department has been instructed to get it done!”

ZTE has been crippled by a ban on U.S. supplies to its business, and sources briefed on the matter told Reuters that China has demanded the issue be resolved as a prerequisite for broader trade negotiations.

In a subsequent tweet, Trump expressed optimism about trade talks with China despite claiming past negotiations have been one-sided in favor of Beijing.

“China and the United States are working well together on trade, but past negotiations have been so one sided in favor of China, for so many years, that it is hard for them to make a deal that benefits both countries,” Trump tweeted. “But be cool, it will all work out!”

Buying interest waned over the course of the session, however, with some traders reluctant to continue buying stocks amid a lack of major U.S. economic data.

Reports on retail sales, homebuilder confidence, housing starts, and industrial production are likely to attract attention in the coming days.

Natural gas stocks saw considerable strength on the day, with the NYSE Arca Natural Gas Index climbing by 1.7 percent. With the gain, the index reached its best closing level in over three months.

The advance by natural gas stocks came amid an increase by the price of the commodity, as natural gas rose $0.036 to $2.842 per million BTUs.

Significant strength was also visible among semiconductor stocks, as reflected by the 1.3 percent gain posted by the Philadelphia Semiconductor Index.

NXP Semiconductors (NXPI) posted a standout gain after a report from Bloomberg said Chinese regulators have restarted their review of Qualcomm’s (QCOM) application to acquire the chipmaker.

Biotechnology, telecom, and oil stocks also saw notable strength on the day, while real estate stocks moved to the downside.

Commodity, Currency Markets

Crude oil futures are climbing $0.70 to $71.66 a barrel after rising $0.26 to $70.96 a barrel on Monday. Meanwhile, after falling $2.50 to $1,318.20 an ounce in the previous session, gold futures are plunging $15.50 to $1,302.70 an ounce.

On the currency front, the U.S. dollar is trading at 110.26 yen compared to the 109.66 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1853 compared to yesterday’s $1.927.

Asia

Asian stocks closed mostly lower on Tuesday amid continued uncertainty over trade after U.S. President Donald Trump expressed optimism about trade talks with China but claimed past negotiations have been one-sided in favor of Beijing. A raft of mixed economic data from China also kept investors nervous.

Japanese shares ended modestly lower as investors opted to book some profits following three consecutive sessions of gains. The benchmark Nikkei 225 Index dipped 47.84 points or 0.2 percent to 22,818.02, while the broader Topix Index closed marginally lower at 1,805.15.

Exporters ended mostly lower despite the yen declining against its major counterparts. Mitsubishi UFJ Financial advanced 1.7 percent ahead of its earnings release, and Sumitomo Mitsui Financial climbed 2.1 percent.

Australian shares closed lower as investors digested a slew of economic reports from China, Australia’s largest trading partner. The benchmark S&P/ASX 200 Index dipped 37.50 points or 0.6 percent to 6,097.80, while the broader All Ordinaries Index ended down 36.30 points or 0.6 percent at 6,198.70.

National Australia Bank fell 3.4 percent on going ex-dividend, but ANZ and Commonwealth rose 0.4 percent and 0.2 percent, respectively. Telstra slumped 5.6 percent to extend losses from the previous session after warning of tough competition.

Bluescope Steel dropped 1.4 percent despite the company raising its first-half earnings outlook by about 12 percent.

In economic news, Australian consumer confidence improved for the fifth straight time during the week ended May 13th, a weekly survey compiled by the ANZ bank and Roy Morgan Research showed.

Separately, minutes from the Reserve Bank’s May 1st meeting revealed that board members still believe the cash rate’s next move is more likely to be up, not down.

Seoul stocks fell notably amid selling by foreign investors. The benchmark Kospi dropped 17.57 points or 0.7 percent to 2,458.54. Market heavyweight Samsung Electronics declined 1.8 percent to extend losses for a third straight session.

Meanwhile, China’s Shanghai Composite Index rose 18.09 points or 0.6 percent to 3,192.12 as optimism towards MSCI inclusion of 234 China-listed shares helped investors shrug off renewed trade tensions and mixed economic readings. Hong Kong’s Hang Seng Index slumped 389.05 points or 1.2 percent to 31,152.03 following a six-day rally.

Chinese industrial output grew 7.0 percent year-on-year in April, the National Bureau of Statistics said. That topped expectations for an increase of 6.4 percent and was up from 6.0 percent in March.

Retail sales advanced an annual 9.4 percent, missing forecasts for 10.0 percent and down from 10.1 percent in the previous month. Fixed asset investment picked up 7.0 percent on year, shy of expectations for 7.4 percent and down from 7.5 percent a month earlier.

Europe

European stocks have moved to the upside during trading on Tuesday as investors react to mixed economic readings and corporate earnings releases.

While the German DAX Index has inched up by 0.1 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index are up by 0.4 percent and 0.5 percent, respectively.

Homebuilder Taylor Wimpey has rallied in London after announcing new goals for the next five years to 2023.

Cairn Energy has also jumped. The oil and gas firm said that its platform for creating value remains strong and it expects 2018 to be a busy and successful year.

Credit Agricole Group shares have advanced after the French lender reported a marginal rise in first quarter net income amid growth in areas such as insurance and asset management.

Swiss banking software firm Temenos have also soared after its shares were included in MSCI’s Switzerland index.

Meanwhile, Vodafone shares have fallen after the telecom group said it expects a slowdown in underlying profit growth this year.

French telecoms group Iliad has plummeted more than 17 percent after posting weak first quarter sales and announcing management changes.

Danish jewelry maker Pandora has also slumped as it flagged a slowdown in growth in China.

Technology and industrial conglomerate ThyssenKrupp has also moved to the downside after posting a surprise 23 million euro loss at its struggling Industrial Solutions business.

In economic news, the Eurozone economy expanded at a slower pace as previously estimated in the first quarter, a flash estimate from Eurostat showed. GDP grew 0.4 percent sequentially, slower than the 0.7 percent expansion seen in the previous quarter.

Data from Destatis showed that German economic growth halved in the first quarter. GDP grew 0.3 percent sequentially, slower than the 0.6 percent expansion seen in the previous quarter.

A gauge of French consumer price inflation remained stable as initially estimated in April, while the U.K. jobless rate in the three months to March reached the lowest point since 1975, separate reports showed.

U.S. Economic Reports

Retail sales in the U.S. increased in line with economist estimates in the month of April, according to a report released by the Commerce Department.

The Commerce Department said retail sales rose by 0.3 percent in April after climbing by an upwardly revised 0.8 percent in March.

Economists had expected sales to rise by 0.3 percent compared to the 0.6 percent increase originally reported for the previous month.

Excluding a modest increase in auto sales, retail sales still rose by 0.3 percent in April following an upwardly revised 0.4 percent increase in March.

Ex-auto sales have been expected to climb by 0.5 percent compared to the 0.2 percent uptick originally reported for the previous month.

A separate report released by the New York Federal Reserve showed an unexpected acceleration in the pace of growth in regional manufacturing activity in the month of May.

The New York Fed said its general business conditions index jumped to 20.1 in May from 15.8 in April, with a positive reading indicating growth in regional manufacturing activity. Economists had expected the index to edge down to 15.5.

At 10 am ET, the National Association of Home Builders is scheduled to release its report on homebuilder confidence in the month of May. The housing market index is expected to come in unchanged at 69.

The Commerce Department is also due to release its report on business inventories in the month of March at 10 am ET. Economists expect business inventories to inch up by 0.1 percent.

At 1 pm ET, San Francisco Federal Reserve President John Williams is scheduled to speak at the Economic Club of Minnesota in Minneapolis.

Stocks In Focus

Chinese online discount retailer Vipshop (VIPS) is seeing significant pre-market weakness after reporting first quarter earnings that missed analyst estimates.

Shares of Agilent (A) may also come under pressure after the medical device maker reported fiscal second quarter earnings in line with estimates but provided disappointing guidance.

On the other hand, shares of Symantec (SYMC) are moving higher in pre-market trading after the cybersecurity software company said it does not expect an internal accounting probe to result in a material adverse impact on its historical financial statements.

Chipmaker STMicroelectronics (STM) may also move to the upside after forecasting stronger than expected full-year revenue growth.

by RTTNews Staff Writer

For comments and feedback: editorial@rttnews.com

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