- October retail sales rise more than expected
- Target’s bleak outlook weighs on retailers
- Micron supply cut triggers chip sell-off
- Indices down: Dow 0.12%, S&P 0.83%, Nasdaq 1.54%
Nov 16 (Reuters) – Major Wall Street indexes ended lower on Wednesday as a gloomy outlook for Target sparked fresh concerns over retailers ahead of the crucial holiday season, while stocks of semi- drivers fell after Micron’s supply cut.
Shares of Target Corp
Retail stocks fell overall, including declines of over 8% in shares of Macy’s Inc (MN) and Best Buy Co Inc (BBY.N) and a 7% drop in Foot Locker (FL.N). The S&P 500 consumer discretionary sector (.SPLRCD) lost 1.5%.
Shares of Micron Technology (MU.O) fell 6.7% after the company announced it would cut memory chip supply and further cut its capital spending plan. The information technology sector S&P 500 (.SPLRCT) fell 1.4% and the Philadelphia SE Semiconductor Index (.SOX) fell 4.3%.
“The biggest issue in the industry is Target earnings and what that means for retail and consumer spending in general. I think that kind of set the tone for the market,” said Chuck Carlson, chief executive. of Horizon Investment Services in Hammond, Indiana.
The Micron news is “certainly causing some tech investors to take some of those short-term profits off the table, because it still looks like the fundamentals still aren’t good in the tech space,” Carlson said.
The Dow Jones Industrial Average (.DJI) fell 39.09 points, or 0.12%, to 33,553.83, the S&P 500 (.SPX) fell 32.94 points, or 0.83%, to 3,958.79 and the Nasdaq Composite (.IXIC) fell 174.75 points, or 1.54%, to 11,183.66.
Gains in defensive areas such as Utilities (.SPLRCU) and Consumer Staples (.SPLRCS) helped mitigate S&P 500 losses. The Utilities sector rose 0.9%, while commodities gained 0.5%.
Despite Target’s sales warning, data showed U.S. retail sales rose more than expected in October as households stepped up motor vehicle purchases, suggesting consumer spending increased at the start of the fourth quarter.
Elsewhere in retail, shares of Lowe’s (LOW.N) rose 3% after the home improvement company raised its full-year profit forecast.
Stocks had staged a big rally over the past month after weaker-than-expected inflation data raised hopes that the US Federal Reserve could become less aggressive with interest rate hikes.
“The market had had a good rally from those lows and continued to rise,” said George Catrambone, head of Americas trading at DWS Group. “The market has a lot to think about and digest as we approach the end of the year.”
Fed Governor Christopher Waller, an early and outspoken inflation hawk, said he was now “more comfortable” with lower rate increases going forward after data showed a slowdown in price increases.
Investors were also monitoring geopolitical tensions. A missile that hit Poland was likely a stray missile fired by Ukrainian air defenses and not a Russian strike, Poland and NATO have said, allaying global concern that the war in Ukraine could spill across the border .
Falling issues outnumbered rising ones on the NYSE by a ratio of 1.96 to 1; on the Nasdaq, a 2.23-to-1 ratio favored decliners.
The S&P 500 posted 3 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 71 new highs and 133 new lows.
About 10.5 billion shares changed hands on US exchanges, compared to the daily average of 12.2 billion over the past 20 sessions.
Reporting by Lewis Krauskopf in New York, Bansari Mayur Kamdar, Ankika Biswas and Amruta Khandekar in Bengaluru; Editing by Shounak Dasgupta, Arun Koyyur and David Gregorio
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