Stock are lower Wednesday as Target earnings disappoint and Fed Chair Powell warns ‘there could some pain involved’ with the Fed’s inflation approach.
Stocks were falling Wednesday following disappointing results from another major retailer and comments from Federal Reserve Chair Jerome Powell regarding the Fed’s efforts to combat inflation.
The Dow Jones Industrial Average fell 300 points, or 0.92%, to 32,328, while the S&P 500 lost 1.22% and the tech-heavy Nasdaq dropped 1.48%.
Target (TGT) – Get Target Corporation Report shares cratered 22.7% after the giant Minneapolis retailer reported fiscal-first-quarter earnings that came up short of analyst estimates.
Lowe’s (LOW) – Get Lowe’s Companies, Inc. Report shares were down 3.2% after the Mooresville, N.C., home-improvement chain reported Q1 net income exceeded estimates while revenue came up short.
“Now that’s spring has finally arrived, we are pleased with the improved sales trends we are seeing in May,” CEO Marvin Ellison said.
Target’s earnings miss came one day after Walmart (WMT) – Get Walmart Inc. Report posted weaker-than-expected fiscal-first-quarter earnings and reduced its full-year profit forecast, as surging costs ate into the bottom line of the world’s biggest retailer.
Despite Walmart’s disappointing report, stocks finished higher on Tuesday amid news that Shanghai had recorded its third consecutive day with no new covid infections. That’s an important benchmark that could trigger the easing of restrictions on business and travel in China’s biggest city.
The city of 25 million reported a fourth consecutive day without any new infections in the community, holding on to its prized “zero covid” status, according to Reuters.
‘There Could be Some Pain Involved’
Powell said the Fed was determined to reduce inflation and reiterated that it hoped to do so without prompting a jump in joblessness. The Fed is aggressively raising rates to reduce price pressures.
In an interview at the The Wall Street Journal’s Future of Everything Festival, he signaled that in both June and July, the central bank likely would repeat the half-percentage-point rise in rates it put in place early this month.
“Restoring price stability is an unconditional need. It is something we have to do,” he told the Journal. “There could be some pain involved.”
The Commerce Department reported that U.S. single-family home building and permits fell in March as higher mortgage rates increased costs, Reuters reported.
Economists polled by Reuters had forecast starts declining to a rate of 1.765 million units.
Mortgage rates have surpassed 5% for the first time in a decade. Homes remain in short supply, boding well for the homebuilding industry.
The latest data showed a strong backlog of homes that have been approved for construction but on which building hasn’t started.
JPMorgan Chase (JPM) – Get JPMorgan Chase & Co. Report shareholders voted against the company’s proposal to pay Chief Executive Jamie Dimon a $50 million retention bonus as part of its compensation plans.
At the annual meeting, less than a third — 31% — of the banking giant’s holders voted in favor.
The vote isn’t binding, but The Wall Street Journal called it a rare rebuke to Dimon’s leadership of the company. Dimon was paid $34.5 million for as compensation for 2021.
