U.S. stocks drifted to a mixed finish on Wednesday, though the modest moves for indexes masked some thrashing underneath the surface. Target lost more than a fifth of its value after the retailer gave a dour forecast for the holiday shopping season.
The Standard & Poor’s 500 index finished the day virtually unchanged after erasing a loss of 1% from the morning. The Dow Jones industrial average eked out a gain of 0.3%, and the Nasdaq composite slipped 0.1%.
Target’s 21.4% tumble followed its report showing weaker profit and revenue for the latest quarter than analysts expected. The retailer also gave a forecast for profit in the upcoming holiday season that was below analysts’ estimates.
Target’s performance stood in stark contrast to rival Walmart, which reported another quarter of stellar sales Tuesday and released optimistic projections for the holiday season.
Hints about how U.S. consumers are doing are under particular scrutiny, given that they’ll need to keep spending if the U.S. economy is to continue to avoid a recession. Shoppers are contending with high prices across the economy and still-high interest rates.
“I find the Target and Walmart earnings very interesting because we typically see a waterfall type effect when the economy begins to struggle, with shoppers trading down from stores such as Target to Walmart,” said JJ Kinahan, chief executive of IG North America. “I’m not entirely sure if the move to Walmart is simply a matter of shoppers finding more items they like at Walmart or if this is a potentially concerning economic sign.”
Besides Target, several lower-priced retailers were among the biggest losers in the S&P 500. Dollar General fell 4.2%, and Dollar Tree sank 2.6%.
On the winning end of Wall Street was Williams-Sonoma, which jumped 27.5% after the home-goods retailer delivered better profit and revenue for the latest quarter than analysts expected. The parent of Pottery Barn also said it expects overall sales to fall by less this fiscal year than it had previously forecast.
Comcast rose 1.6% after announcing the spinoff of USA, CNBC, MSNBC and other cable television networks into a stand-alone company that will have its own stock trading on the market.
All told, the S&P 500 inched up by 0.13 of a point to 5,917.1. The Dow added 139.53 points to 43,408.47, and the Nasdaq composite slipped 21.32 points to 18,996.14.
The headliner of the day, week and perhaps the rest of the year for Wall Street was scheduled to arrive later Wednesday. That’s when superstar stock Nvidia will unveil its results for the latest quarter.
The company has grown into a $3.6-trillion behemoth because of nearly insatiable demand for its chips used in artificial intelligence technology. It’s grown so fast, with its stock nearly tripling for the year through Tuesday, that pressure has grown for it to show it can keep leapfrogging past analysts’ already high expectations.
Trading in the options market suggests Nvidia’s profit report was the most anticipated event left in 2024, more than even the Federal Reserve’s upcoming meeting on interest rates, according to Barclays Capital.
Outside of Nvidia, financial markets are still absorbing the effects of Donald Trump’s victory in the presidential election.
Wells Fargo Investment Institute on Wednesday raised its forecasts for where Treasury yields will end next year, in part because of expectations that Trump’s policies will drive faster U.S. economic growth and inflation. Strategists at the institute also raised their forecast for where the S&P 500 will end next year because of that faster growth, which should translate into bigger corporate profits, along with easier regulations.
Treasury yields held relatively steady in the bond market. The 10-year yield edged up to 4.41% from 4.40% late Tuesday. It generally has been rising from less than 3.70% in September.
In stock markets abroad, indexes moved modestly across much of Europe and Asia.
The FTSE 100 in London slipped 0.2% after the Office for National Statistics reported the inflation rate picked up to a six-month high in October.
Japan’s Nikkei 225 slipped 0.2% after the Finance Ministry reported that the country recorded a trade deficit in October for a fourth straight month.
Choe writes for the Associated Press. AP writer Zimo Zhong contributed to this report.