U.S. MARKET AVERAGES
Market traded in a narrow range during the session.
Strong retail sales, falling oil price, and higher than expected producer prices, all caught up market in a trading range.
Strong retail sales and better than expected earnings from Home Depot were not enough t overcome weak sales outlook from Target. Retail stocks declined as number of companies in the sector are expected to release earnings this week.
Higher than expected producer price index put market in the in the defensive mood even as the oil prices declined during the session. Most energy related stocks fell and market seemed more focused on inflation worries.
On the earnings front Home Depot delivered better than expected earnings so did J.C. Penney Co but Staples failed to spark market’s imagination.
MOVERS AND SHAKERS
The retailer
Home Depot (
HD: chart) reported third-quarter results that exceeded analyst estimates and raised its full-year profit outlook The company’s stock added 2.8%.
The department store operator
JC Penney (
JCP: chart) posted earnings from continuing operations that came above Wall Street forecast. The company attributed its strong results to an improved operating performance, lower interest expense and the positive impact of its ongoing buyback program. The company’s stock fell 1.8% on Monday.
The discount retailer
Target Corp (
TGT: chart) lowered its November sales outlook. The company said that it had been looking for a same-store sales gain of 4%-6%, but due to current trends, it now expects that sales will come in below that estmated range. The company’s shares fell 4.2%.
Standard & Poor said the online retailer
Amazon.com Inc (
AMZN: chart) will replace
AT& T Corp (
T: chart) in the S&P 500 Index. Fund managers, which track the index, have to add the company to their portfolio, which will boost demand for its shares. Amazon’s stock gained 7.1%.
ECONOMIC NEWS
Tuesday morning, the Department of Commerce released its report on
retail sales in the month of October, showing that sales fell modestly. Economists had been expecting a more significant decline.
The report showed that retail sales fell 0.1 percent in October following an upwardly revised 0.3 percent increase in September. The drop in sales was smaller than the 0.7 percent decrease that economists had expected.
Wholesale prices rose more than expected in October, according to a report from the Department of Labor, although the report also showed an unexpected decrease in core prices.
The report showed that the
Producer Price Index rose 0.7 in October following a 1.9 percent increase in September. Economists had been expecting a more modest 0.1 percent increase in prices.
The increase was partly due to a continued increase in energy prices, which rose 4.1 percent in October after surging up by 7.1 percent in September. While gas prices turned lower in October, prices for residential natural gas and home heating oil advanced at faster rates than in September.
The report also showed that core prices, which exclude food and energy prices, fell by 0.3 percent in October, reversing the 0.3 percent increase seen in September. The decrease surprised economists, who had expected another 0.3 percent increase.
INTERNATIONAL MARKET NEWS
Asian-Pacific benchmarks closed lower, reflecting domestic worries and lackluster U.S. markets session Monday. The Japanese Nikkei shed 0.12% on bank shares and other overvalued stocks sell-off. Across the region, Hong Kong’s Hang Seng finished flat, South Korea’s Kospi declined 0.3%, and Singapore Straits Times lost 0.7%.
European markets fell across the region, pressured by disappointing outlooks from telecom company Vodafone and drinks maker Diageo. Weaker U.S. markets also weighed on sentiment. The German DAX 30 lost 0.2%, the French CAC 40 shed 0.2%, and London’s FTSE 100 declined 0.7%.
