NEW YORK (AP) — Most U.S. stocks are falling on Wednesday after some of the country's biggest retailers gave mixed forecasts for where they see their profits heading under the uncertainty caused by President Donald Trump's trade war.
The S&P 500 was down 0.2% in afternoon trading and on track for a second straight drop after breaking a six-day winning streak. The Dow Jones Industrial Average was down 338 points, or 0.8%, as of 12:56 p.m. Eastern time, while gains for Google's parent company and a handful of other influential tech stocks sent the Nasdaq composite 0.3% higher.
Stocks were also feeling pressure from higher Treasury yields in the bond market. Such rises in yields can push down prices of all kinds of investments, and yields have been climbing in part because of concerns that tax cuts under consideration in Washington could pile trillions of more dollars onto the U.S. government's debt.
Target slumped 4.1% after the retailer reported weaker profit and revenue than analysts expected for the start of the year. The company said it felt some pain from boycotts by customers. It had scaled back many diversity, equity and inclusion initiatives early this year following criticism by the White House and conservative activists, which drew its own backlash.
Perhaps more worryingly for Wall Street, Target also cut its forecast for profit over the full year.
Lowe’s fell more modestly after after reporting a profit for the latest quarter that edged past analysts’ expectations. The home-improvement retailer also said it’s sticking with its forecasts for sales and profit over the full year, even with “near-term uncertainty and housing market headwinds,” according to CEO Marvin Ellison.
Its stock was most recently down 1.6%.
Carter's, which sells apparel for babies and young children, sank 9.9% after cutting its dividend. New CEO Doug Palladini said the company made the move in part because of investments it anticipates making in upcoming years, as well as the possibility that it “may incur significantly higher product costs as the result of the new proposed tariffs on products imported into the United States.”
On the winning side of Wall Street was Keysight Technologies, which not only topped analysts' expectations for profit and revenue in the latest quarter but also raised its forecast for growth over its full fiscal year. The hardware, software and services company rose 3.2%.
Homebuilder Toll Brothers climbed 2.6% after beating analysts' forecasts for profit and revenue in the latest quarter. It stood by its forecast for how many homes it will deliver this fiscal year, as a shortage of housing nationwide helps offset what it called a “softer demand environment.”
Gains for a handful of influential tech stocks also helped limit the market's overall losses, even though four out of five stocks within the S&P 500 were falling. Alphabet rose 4.4%, and chip company Advanced Micro Devices climbed 1.6%.
A growing number of companies have recently said tariffs and uncertainty about the economy are making it difficult to guess what the upcoming year will bring. Others, including Walmart, have said they'll have to raise prices to offset Trump's tariffs.
U.S. stocks have recently recovered most of their steep losses from earlier in the year as Trump has delayed or rolled back many of his stiff tariffs. Investors are hopeful that Trump will lower his tariffs more permanently after reaching trade deals with other countries.
In the bond market, the yield on the 10-year Treasury rose to 4.54% from 4.48% late Tuesday and from just 4.01% early last month. That’s a notable move in the bond market.
Such yields effectively show how much in interest governments are having to pay investors in order to borrow money, and they’ve been on the rise for developed economies around the world. That’s partly because governments are continuing to borrow more cash to pay their bills, while central banks like the Federal Reserve have cut back on their own investments in government bonds.
Moody’s Ratings became the last of the three major ratings agencies late last week to downgrade the U.S. government’s credit rating on concerns that it may be heading toward an unsustainable amount of debt.
“We do not think that the downgrade matters by itself,” Bank of America strategists wrote in a BofA Global Research report, “but it has served as a wake up call for those investors who had been ignoring the ongoing fiscal discussion.”
In stock markets abroad, indexes were mixed amid mostly modest movements across Europe and Asia
London's FTSE 100 rose 0.1% after a report said inflation in the United Kingdom spiked to its highest level for more than a year in April.
Tokyo's Nikkei 225 fell 0.6% after a report said Japan's exports have slowed due to tariffs
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
Credit: AP
Credit: AP