Wednesday August 18th


S&P 500 futures are flat as investors digest more retail earnings, await Fed minutes

U.S. stock index futures were little changed on Wednesday as investors awaited the release of the Federal Reserve’s latest meeting minutes for insights into when the central bank may start removing stimulus. Investors also waded through more earnings results from big retailers Target and Lowe’s. Futures on the S&P 500 were near the flatline, down 4 points, or 0.1%. Dow Jones Industrial Average futures shed 76 points, or 0.2%, after it snapped a 5-day winning streak on Tuesday. Nasdaq 100-futures were higher by 0.1%. The Federal Reserve publishes its meeting minutes from its July gathering at 2 p.m. ET. Market participants will be looking for clues about when the central bank could start dialing back its monthly bond buying program. Since that July meeting, there’s been growing support within the Fed to announce a tapering in September and begin it in October. The 10-year Treasury yield was mostly flat around 1.27% on Wednesday ahead of the release. Shares of Target pulled back in premarket trading even after beating on second-quarter earnings. The retailer’s profit and revenue topped expectations and the company raised its forecast for the second half of the year, citing a good start to back-to-school spending. Target shares were up 44% this year through Tuesday, so some investors may be taking profits. Shares of Lowe’s jumped more than 4% in premarket trading after earnings last quarter topped expectations, with higher sales to home professionals. ViacomCBS shares popped 3% in premarket trading after Wells Fargo upgraded the stock, saying it can soar more than 50% on the back of strong streaming growth and possible industry consolidation. On Tuesday, the major averages dipped following a decline in July retail sales. The Dow lost 282 points, dragged down by a 4.3% drop in Home Depot’s stock. The S&P 500 also slipped 0.7% for its worst day since July 19. The Nasdaq Composite was the relative underperformer, dropping 0.9% as Facebook, Amazon, Apple and Google-parent Alphabet all closed lower. “The stock market is way overdue for a correction. Covid cases continue to spike higher darkening economic reopenings, consumer data shockingly has collapsed recently — including consumer confidence last Friday and retail sales and homebuilders’ sentiment [Tuesday] — several stocks have stopped reacting positively to good earnings, inflation reports remain hot, and Federal Reserve taper talk is everywhere,” Jim Paulsen, chief investment strategist at the Leuthold Group, said. The Census Bureau said Tuesday that retail sales fell 1.1% in June, driven largely by a drop in car sales. Economists expected retail sales to fall by 0.3% in July, compared to a revised 0.7% gain in June, according to Dow Jones consensus forecast. Excluding autos, sales were down 0.4% compared to estimates of a 0.2% slowdown. The small cap benchmark Russell 2000 dropped 1.2% on Tuesday. Cisco Systems and Nvidia report after the bell. Stock trading  app Robinhood releases its first earnings report as a public company on Wednesday after the bell. Shares in Asia were higher on Wednesday, with the Reserve Bank of New Zealand keeping interest rates unchanged despite expectations of a hike. In Japan, the Nikkei 225 rose 0.59% to close at 27,585.91 while the Topix index climbed 0.44% on the day to 1,923.97. Mainland Chinese stocks closed higher. The Shanghai composite gained 1.11% to 3,485.29 while the Shenzhen component rose 0.721% to 14,454.11. Hong Kong’s Hang Seng index was 0.35% higher, as of its final hour of trading. South Korea’s Kospi closed 0.5% higher at 3,158.93. Oil prices steadied on Wednesday after four days of declines with investors still worried about the outlook for fuel demand as the use of rail, air and other forms of transport remained constrained amid surging COVID-19 cases worldwide. Brent crude was up 70 cents or 1%. U.S. oil gained 63 cents or 1% to $67.22 a barrel. Gold prices edged higher on Wednesday, as concerns over the spread of the Delta variant of the coronavirus buoyed bullion’s appeal and investors awaited minutes from the Federal Reserve’s latest policy meeting. Spot gold was up 0.1% at $1,787.50 per ounce by 0958 GMT, after hitting its highest since Aug. 6 at $1,795.25 in the previous session. U.S. gold futures edged 0.1% higher to $1,790.