Dow, S&P edge lower after weaker-than-expected housing data

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© Chris Delmas/AFP/Getty Images

MARKET SNAPSHOT

© Chris Delmas/AFP/Getty Images

Major U.S. stock benchmarks saw losses pick up steam Tuesday afternoon as enthusiasm centered on a strong round of earnings from major retailers, including Dow components Home Depot Inc. and Walmart Inc., appeared to wane.

How are stock benchmarks performing?

  • The Dow Jones Industrial Average fell by about 150 points, or 0.4%, to 34,179.
  • The S&P 500 was off 18 points, or 0.5%, at 4,144.
  • The Nasdaq Composite slipped 20 points, or 0.2%, to 13,360.

On Monday, stocks saw modest losses, with the Dow declining 54.34 points, or 0.2%, to end at 34,327.79, while the S&P 500 fell 0.3% and the Nasdaq Composite declined 0.4%.

What’s driving that market?

Stocks took a leg lower late Tuesday, with equity-market investors caught in a tug of war, as upbeat corporate results and expectations for a booming economic expansion in the wake of the COVID-19 pandemic compete with worries about lofty valuations and signs of accelerating inflationary pressures.

Home Depot results provided an early boost to the mood on Wall Street after the home-improvement retailer reported fiscal first-quarter profit and sales that were well above expectations, citing “unprecedented demand” for home projects. Shares were off 0.5%.

Other heavyweight retailers, including Walmart Inc. and Macy’s Inc. also delivered strong results Tuesday morning.

But a round of weaker-than-expected housing data under cut the positive tone.

The Census Bureau said U.S. home builders started construction on homes at a seasonally adjusted annual rate of 1.57 million in April, representing a 9.5% decrease from the previous month’s lowered figure. The pace of permitting for new housing units increased again in March. Permitting for new homes occurred at a seasonally adjusted annual rate of 1.76 million, up 0.3% from March and 61% from a year ago.

Strong earnings from retailers were a reminder to investors that the consumer is “roaring back” as pandemic worries fade, Craig Fehr, investment strategist at Edward Jones, told MarketWatch. But the housing data, which was likely hampered by rising prices for lumber and other factors, served as a reminder that “inflation is still the predominant risk to this positive economic story.”

Retailers are bringing up the rear of what’s been a strong earnings season. But equity markets have seen choppy price action since the middle of last month, and investors should probably prepare for further volatility and consolidation, Fehr said.

“After the first year of this recovery where stocks were up sharply and rather consistently, seeing the market tread a bit of water is not a bad thing,” he said, as it gives the market “an opportunity to rein in valuations a little bit.”

Attention was also building around President Joe Biden’s $2.3 trillion infrastructure proposal, and Treasury Secretary Janet Yellen was slated to deliver a speech at the U.S. Chamber of Commerce in support of the proposal.

Meanwhile, Bloomberg News reports that Republicans, led by West Virginia Sen. Shelley Moore Capito, were set to deliver their own infrastructure plan as early as Tuesday.

Former Treasury Secretary Larry Summers on Tuesday continued his criticism of the Federal Reserve’s easy policy stance, arguing, in remarks at an event hosted by the Atlanta Fed, that the central bank’s focus on healing the jobs market is misplaced amid evidence of labor shortages.

In deal news, Amazon.com Inc. was reportedly in discussions to buy MGM Holdings Inc., the studio behind the James Bond franchise, according to a report Monday by the Information, citing a person familiar with the situation.

The report comes after AT&T IncT and Discovery IncDISCA on Monday agreed on a $43 billion deal to combine their media holdings in a new company.

Which companies are in focus?

  • Shares of Walmart were up 2.4% after delivering earnings and revenue that topped forecasts and raised its full-year guidance.
  • Macy’s Inc. shares rose 1.3% after delivering a surprise earnings beat and lifting guidance.
  • Shares of Coinbase Global Inc. were up 0.2% at $248.64, a day after the crypto platform announced plans to sell $1.25 billion of convertible debt and that its closed below its $250 reference price for the first time since the company listed on the Nasdaq exchange in mid-April
  • Flywire Corp. FLYW, set terms of its initial public offering, in which the Boston-based payments enablement and software company is looking to raise up to $208.8 million.
  • BioNTech SE BNTX, the German biotech that joined with Pfizer IncPFE, to develop a COVID-19 vaccine that is authorized for use in the U.S., said Tuesday it has named Jens Holstein to be chief financial officer.

What are other markets doing?

  • The yield on the 10-year Treasury note was up 1.3 basis points at 1.652%, as appetite for bonds appeared to cool. Yields and bond prices move in opposite directions.
  • The ICE U.S. Dollar Index a measure of the U.S. currency against a basket of six major rivals, was down 0.3% to trade at its lowest level since late February.
  • Oil futures turned lower, with the U.S. benchmark pulling back from a finish at a more-than-two-year high and Brent crude the global benchmark, losing ground after briefly trading above $70 a barrel for the first time since mid-March.
  • Gold futures were marginally lower, a day after finishing at a four-month high.
  • The Stoxx Europe 600 index rose 0.2%, while London’s FTSE 100 rose fractionally.
  • Hong Kong’s Hang Seng Index rose 1.4%, while Japan’s Nikkei 225 jumped 2.1% and the Shanghai Composite edged up 0.3%.

—Mark DeCambre contributed to this article

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