Stocks were slow to get off the mat Wednesday as market participants sifted through several earnings reports from major retailers and looked ahead to tonight's quarterly results from AI giant Nvidia (NVDA).
Not helping matters was a hawkish tone in the minutes from the Federal Reserve's May policy meeting, which kept pressure on stocks through the close.
Starting with today's earnings news. Target (TGT, -8.0%) captured most of the attention after its first-quarter earnings fell short of estimates. The retailer also posted its fourth straight quarter of declining same-store sales as consumers bought fewer home goods and hardlines (i.e., consumer electronics and toys).
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Still, BofA Securities analyst Robert Ohmes maintained a Buy rating on the consumer discretionary stock after earnings.
"While near-term sales remain pressured, we believe TGT's focus on value positions it well for share gains going forward," Ohmes says. "Recently announced price investments, changes to the Target Circle 360 rewards program, and several new Owned Brand launches focused on value and entry-level price points should support an improving value perception."
TJX pops on strong earnings
Marshalls parent TJX (TJX) was another big post-earnings mover; its share price surged 3.5% after the off-price retailer's beat-and-raise quarter. The company's strong results were driven by impressive same-store sales growth in the U.S. across all its brands, including TJ Maxx and HomeGoods.
"TJX continues to thrive in a challenging retail environment, boasting strong same-store sales growth," says Shams Afzal, managing director and portfolio manager for Carnegie Investment Counsel. "The concept of 'treasure hunt' where consumers discover branded products at great value, remains quite appealing in the current environment."
Nvidia slips ahead of earnings
While retail earnings captured investors' attention today, most folks had one eye trained on Nvidia before its after-the-close announcement. The semiconductor stock fell 0.5% ahead of its first-quarter results but remains 92% higher this year.
If Nvidia "can continue their enviable, remarkable string of beating estimates, raising guidance, then beating the raised guidance next quarter, that means that the AI trade can and will proceed apace," says Steve Sosnick, chief strategist at Interactive Brokers. But if there is the slightest sign of weakness, "much more than that stock alone will suffer," he adds.
CFRA says 3M stock is now a Buy
As for the main indexes, the Nasdaq Composite fell 0.2% to 16,801 and the S&P 500 slipped 0.3% to 5,307. The Dow Jones Industrial Average shed 0.5% to 39,671 amid weakness in Dow (DOW, -2.2%) and Goldman Sachs (GS, -1.7%).
3M (MMM) was another one of the worst-performing Dow Jones stocks today, falling 1.6%. The Post-It maker is still up nearly 11% for the year to date after its recently announced dividend cut wasn't as bad as many feared.
The company's improving risk profile and cost-cutting measures prompted CFRA Research analyst Jonathan Sakraida to upgrade 3M stock on Tuesday to Buy from Hold.
"We see a meaningful turnaround being more achievable amid a more lean and nimble 3M," Sakraida wrote in a note. "We're encouraged by recent progress on margins as 3M focuses on improving profitability amid a mixed demand environment."
Fed members split on pace of balance-sheet runoff
On the economic front, the release of the minutes from the Federal Reserve's May meeting was the main event for investors today. Earlier this month, the central bank kept interest rates at a 23-year high and said it was reducing the pace at which it shrinks its portfolio of Treasury bonds by $35 billion a month.
"A few participants indicated that they could have supported a continuation of the current pace of balance sheet runoff at this time or a slightly higher redemption cap on Treasury securities than was decided upon," the minutes stated.
As for inflation, the minutes confirmed what market participants already know, that it remains "more persistent than previously expected." And as a result, "policy expectations [have] shifted materially" in response.
"Normally the Fed is more important than anything else in the market, but because they've taken themselves out of the conversation, it will now fall to Nvidia earnings this afternoon to dictate which way the market goes from here," says Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
Related content
- Is Investing In Gold Worth It? How Gold Prices Have Changed
- Is the Stock Market Open on Memorial Day in 2024?
- Will Amazon's Updated Alexa Include a Subscription? What To Know
-
Use the 'Newton Rule' to Grow Your 401(k) Retirement SavingsHarnessing Sir Isaac Newton's rule of retirement can boost your 401(k) savings while you chill.
-
Are You a Small Business Owner Buckling Under Economic Pressure? Here's How You Can CopeSignificant emotional and financial challenges, including tariff worries, are piling up on small business leaders. Here's how leaders can develop more healthy coping strategies and systems of support.
-
Are You a Small Business Owner Buckling Under Economic Pressure? Here's How You Can Cope
Significant emotional and financial challenges, including tariff worries, are piling up on small business leaders. Here's how leaders can develop more healthy coping strategies and systems of support.
-
To Raise Prices or Not to Raise Prices: Tariff Tips for Small BusinessesSmall businesses are making critical decisions. Should they pass on higher costs due to tariffs, or would that only cost them more in lost customers?
-
Five Retirement Planning Traps You Can't Afford to Fall Into, From a Wealth AdviserTo help ensure you reach your savings goals and enjoy financial security in your golden years, be aware of these common pitfalls. The key is to be proactive, informed and flexible.
-
Your 401(k) Can Now Include Alternative Assets, But Should It? A Financial Adviser Weighs InMany employer-sponsored plans offer limited investment options, which can stunt growth. But participants considering alternatives might need some sound advice to get the most from their accounts.
-
Will Taxes Shred Your 401(k) or IRA During Your Retirement? It's Very LikelyConventional wisdom dictates that you save in a 401(k) now and pay taxes later, but turning that rule on its head could leave you far better off. A financial planner explains why.
-
More Retirees Are Renting: Should You? A Financial Adviser Weighs InIn some ways, renting is cheaper, more flexible and easier, but unless you understand the implications for your taxes and health costs, it might not be for you.
-
Dow Dives 878 Points on Trump's China Warning: Stock Market TodayThe main indexes erased early gains after President Trump said China is becoming "hostile" and threatened to cancel a meeting with President Xi.
-
I'm a Real Estate Investing Pro: This 1031 Exchange Strategy Can Triple Your Cash FlowSavvy investors can use 1031 exchanges to unlock value by moving capital across markets in a play called geographic arbitrage. These tax implications can make or break the strategy.
