Stocks fell early on Tuesday, signaling a pause in November’s rally as investors awaited earnings from AI chipmaker Nvidia (NVDA) and the release of Federal Reserve minutes.
The benchmark S&P 500 (^GSPC) fell about 0.3%, after the stock index closed at its highest level since August. The tech-heavy Dow Jones Industrial Average (^DJI) and Nasdaq Composite (^IXIC) also fell, falling about 0.2% and 0.5%, respectively.
Retail earnings were disappointing with shares of companies including Lowe’s (LOW), Best Buy (BBY), American Eagle Outfitters (AEO) and Khol’s (KSS) falling on Tuesday amid a decline in consumer spending. clouded forecasts and affected sales.
Looking ahead, eyes will be on Nvidia’s quarterly report for an update on the fundamentals behind the AI hype cycle, after the company’s stock hit a record close on Monday. Expectations are high as the chip giant has become the face of the AI story in 2023, after its latest results sparked a rally in stocks.
Meanwhile, the OpenAI drama is still taking center stage after Microsoft’s (MSFT) CEO hinted he was open to Sam Altman joining the ChatGPT creator.
Microsoft shares were flat in early trading Tuesday, after ending Monday’s session at a record high following the hiring of the abruptly ousted OpenAI CEO. Wall Street sees the tech giant’s move as bolstering its AI prospects, which could be boosted if it ends up benefiting from a threatened employee exodus from OpenAI.
Investors are also watching the minutes from the Fed’s latest rate-setting meeting, amid a debate over whether the rate-cutting optimism that has fueled the rally in stocks is overblown. In light of a shortened vacation week on economic data, comments will be closely scrutinized for any indication of policymakers’ thinking.
Retail profits are disappointing… just before Black Friday
It hasn’t been a great earnings season for some retailers as a decline in consumer spending clouded forecasts and hurt sales. Here’s a summary of what you need to know:
Lowe (LOW): Shares of the home improvement giant fell about 3% after the company lowered its full-year outlook amid falling consumer spending. Third-quarter sales fell 13% while comparable sales fell 7.4%. Lowe’s CEO Marvin Ellison blamed the performance on DIY customers, who spent less than expected on big-ticket items. “DIY pressure had a disproportionate impact on our accounting performance in the third quarter,” he said. Competitor’s actions Home deposit (HD) also came across the news.
Best Buy (BBY): Shares of the electronics retailer fell about 4% in early trading after the company reported mixed results with net sales below expectations. Corrie Barry, CEO of Best Buy, said in the release that “consumer demand was even more uneven and difficult to predict.” Yahoo Finance’s Brooke DiPalma gives you the full breakdown here.
American Eagle Outfitters (AEO): Despite beating third-quarter profits, shares of the young adult retailer fell nearly 20% on Tuesday after its fourth-quarter operating profit forecast disappointed investors. The company said it expects fourth-quarter operating profit to be between $105 million and $115 million. Analysts expected $114 million. Competitor Abercrombie & Fitch (ANF) also saw its shares fall, despite earnings beating estimates and an increase in its 2024 outlook, as investors demand more from the company’s turnaround plan.
Kohl’s (KSS): The department store saw its shares fall more than 10% after reporting a decline in sales, despite falling profits. Net sales fell 5.2% while comparable sales fell 5.5%. The company cut its full-year sales forecast by 2.8% to 4% but raised its full-year EPS forecast.
Dick Sporting Goods (DKS): Unlike other retailers, shares jumped about 10% after the company reported higher third-quarter profit and raised its full-year outlook amid strong demand for equipment sport. These strong results come after the company battled retail product theft and declining profits in 2023.
Stocks fall at the open
Stocks fell Tuesday, with the tech-heavy Nasdaq Composite (^IXIC) leading early morning decliners, down about 0.6% shortly after the opening bell, while the index benchmark S&P 500 (^GSPC) fell about 0.3%. The moves come after both indexes closed at their highest levels since August.
The Dow Jones Industrial Average (^DJI), meanwhile, fell more than 0.1%, with the yield on the 10-year Treasury note down about 1 basis point to trade near 4 .41%.
Stock futures fall, signaling pause in rally
Wall Street stocks opened lower Tuesday after closing with gains, with earnings from AI chipmaker Nvidia and the Federal Reserve minutes later.
Dow Jones Industrial Average futures (^DJI) slipped 0.14%, or 49 points, while S&P 500 futures (^GSPC) lost 0.15%. Contracts on the tech-heavy Nasdaq 100 (^NDX) fell 0.18%.