The S&P 500 and Dow Jones indexes have eased, handing back some gains from a strong rally in the previous session, as investors digest a mixed set of quarterly results from retailers including Home Depot and Walmart.
Home improvement chain Home Depot fell 1.9 per cent as it missed quarterly profit estimates due to higher costs, while department store operator Kohl’s slumped 6.1 per cent after reporting a bigger-than-expected loss.
Walmart, on the other hand, gained 1.7 per cent after posting a jump in first-quarter US comparable sales as online sales soared due to stockpiling of essentials during the coronavirus-related lockdown.
Mike Loewengart, managing director of investment strategy at E*TRADE Financial Corp says the results showed businesses such as Home Depot could still be hit by fallout from the coronavirus.
“Home Depot’s earnings report shows we shouldn’t assume businesses deemed essential with a strong online presence are entirely immune from the effects of the virus,” he said.
Trillions of dollars in stimulus has helped the S&P 500 rebound more than 34 per cent from its March lows.
Although it is now just about 13 per cent below its record high, the pace of the rally has slowed in May owing to uncertainty over the outbreak and rising US-China tensions.
The benchmark index jumped more than 3.0 per cent on Monday, boosted by promising early stage data for a potential COVID-19 vaccine and Federal Reserve Chair Jerome Powell’s pledge to support the economy as needed until the current crisis has passed.
Attention now turns to testimony by Powell and US Treasury Secretary Steven Mnuchin before the Senate Banking Committee about the government’s handling of its massive economic response to the health crisis.
“By far the biggest focus for markets are variables attached to medical news, (followed by) actions from central banks and fiscal policymakers,” said Tim Shaler, chief economist for iTrustCapital in Newport Beach, California.
At 9.57am local time on Tuesday, the Dow Jones Industrial Average was down 136.92 points, or 0.56 per cent, at 24,460.45, the S&P 500 was down 5.92 points, or 0.20 per cent, at 2,947.99, and the Nasdaq Composite was up 33.17 points, or 0.36 per cent, at 9,268.00.
Nine of the 11 major S&P sectors were trading lower, led by financial and energy stocks. Technology and consumer discretionary edged slightly higher.
Advance Auto Parts jumped 7.3 per cent after the company said same-store sales improved significantly at the start of second quarter.
Declining issues outnumbered more than 2-to-1 on the NYSE and nearly matched them on the Nasdaq.
The S&P index recorded four new 52-week highs and no new low, while the Nasdaq recorded 27 new highs and three new lows.