US open: Stocks mixed ahead of FOMC minutes, Target jumps
US stocks eked out small gains on Wednesday with risk appetite subdued as markets awaited minutes of the latest Federal Open Market Committee (FOMC) meeting.
The minutes, due out for release at 1400 ET, could shed some light on what the near-term future looks like for monetary policy, after a barrage of recent mixed economic data clouded the outlook for interest rates.
However, according to analyst Michael Hewson from CMC Markets UK, don't expect any bombshells. "It’s not clear what extra illumination today’s minutes can offer investors given that they are already quite dated and various Fed policymakers have had plenty to say since that July rate hike was implemented," he said.
By mid-morning on Wall Street, the Dow was up 0.3% at 35,035, the S&P 500 gained 0.1% to 4,443 and the Nasdaq was down 0.1% at 13,621.
Stocks slumped on Tuesday as stronger-than-expected US retail sales figures raised concerns that the Fed may step in once again to fight inflationary pressures.
“A healthy consumer was supposed to drive soft landing calls, but too much consumer resilience will drive the Fed to keep rates higher for longer,” said Edward Moya, analyst at Oanda. “This US retail sales report showed spending is picking up, especially given the upward revisions for June's report.”
Industrial output, housing starts in focus
In economic data on Wednesday, US industrial production increased by 1% in July after a revised 0.8% decline the previous month, well surpassing forecasts for a 0.3% increase.
Despite the positive surprise, the near-term outlook doesn’t look so good, according to Oxford Economics. “We think last month's increase will be reversed quickly as the industrial sector is poised to face multiple, intense challenges. Weakening goods demand, elevated interest rates, tighter lending standards, inventory destocking, and the strong US dollar all portend weaker industrial production in the months ahead,” said lead US economist Oren Klachkin.
Meanwhile, housing starts jumped 3.9% in the month of July, compared with the 1.1% gain expected, while building permits edged just 0.1% higher, lower than the +2.1% forecast.
Target jumps despite guidance gloom
In company news, retail heavyweight Target beat expectations with its second-quarter earnings, but slashed its guidance for the full year. Earnings per share are expected to come in at $7-8, down from previous forecasts of $7.75-8.75. By Tuesday's close, the stock was trading close to its lowest levels since mid-2020.
Fellow retailer TJX on the other hand lifted guidance for the full year after a stellar second quarter. Adjusted earnings per share came in at 85 cents compared with the 77 cents consensus estimate.
Tax-filing solutions provider H&R Block jumped after the bell on Tuesday after smashing forecasts with its second-quarter earnings and lifting its guidance for the full year.