U.S. futures turn around on strong retailer performance
NEW YORK (AP) — Wall Street nearly recouped losses overnight and was heading for gains on Tuesday after some warm-weather retailers reported strong second-quarter profits, suggesting Americans continued to spend despite the worst inflation in 40 years.
Dow Jones and S&P futures each fell less than 1% in premarket trading.
Retail giants Walmart and Home Depot, whose quarterly financial results often give investors insight into broader consumer habits, both reported strong second-quarter profits, giving markets a boost ahead of the opening bell.
Walmart earned $5.15 billion, or $1.77 adjusted for one-time costs and fees, easily beating Wall Street’s target of $1.62 per share. Sales also beat analysts’ forecasts and shares rose more than 4% ahead of the opening bell.
Home Depot posted record quarterly profits and revenue, but shares fell less than 1% as the home improvement retailer stuck to its guidance for the year.
Stocks in July had their best month in a year and a half, but some analysts say prices did not properly reflect real risks.
“The news doesn’t seem to matter, there’s just a huge appetite to buy stocks. And to keep buying,” said Clifford Bennett, chief economist at ACY Securities. “Talking about the bottom having already been rated seems somewhat premature. If the market drops again after all this long positioning, it will fall with thunderous impact. Buyers beware.
Stocks in Europe rose and Asian markets were mixed a day after China announced negative economic data and analysts warned that volatility could be ahead.
The Japanese benchmark Nikkei 225 was little changed and finished at 28,868.91. The South Korean Kospi rose 0.2% to 2,533.52. Australia’s S&P/ASX 200 added 0.6% to 7,105.40. Hong Kong’s Hang Seng reversed course and fell 1.1% to 19,830.52, while the Shanghai Composite gained almost 0.1% to 3,277.88.
Markets reacted to news that China’s central bank had lowered a key interest rate, acknowledging that more needed to be done to shore up its economy. The move is the latest warning to markets already nervous about record inflation and fears of recessions in the United States and elsewhere.
China is the world’s second largest consumer of crude oil. The news therefore weighed on energy prices on Monday, but rose slightly on Tuesday. U.S. crude gained 74 cents to $90.15 a barrel. Brent crude, the international standard, took 43 cents to $95.53.
In Europe, the French CAC 40 gained 0.4% at noon and the German DAX rose 0.5%. Britain’s FTSE 100 gained 0.7%.
Global investors are concerned that the US Federal Reserve may apply the brakes too hard and send the economy into recession. Any signal that inflation could peak or decline has helped ease some of these concerns.
“Lack of direction is what investors will suffer from until we see clearer signs that inflation is slowing. And that will take time, as we need to see some encouraging data points to call the fight a success. against inflation from central banks. Lack of clear guidance drives markets up and down,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Investors are also closely watching the impact of inflation on businesses and consumers. Spending has slowed and the economy as a whole has already contracted for two consecutive quarters.
After Walmart and Home Depot, Target publishes its results on Wednesday. The US Department of Commerce also releases its July retail sales report on Wednesday. Economists polled by FactSet expect modest growth of 0.2% from June, when sales rose 1%.
In currency trading, the US dollar rose slightly to 134.39 Japanese yen from 133.27 yen. The euro traded at $1.0130, down from $1.0165.
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