The major indexes swung to a positive finish Tuesday after shrugging off a couple of would-be headwinds.
“After holding on to slight gains late in the trading session yesterday, U.S. equities came under considerable pressure overnight and in the early hours this morning, with two major catalysts driving this early underperformance,” notes Michael Reinking, senior market strategist at the New York Stock Exchange.
First among those was Target (TGT, -2.3%), which sold off this morning after announcing a plan to aggressively “right-size” its inventory and said its operating margin for the second quarter would be lower than expected. Among the actions Target said it planned to take included further markdowns of already discounted wares and canceling existing orders.
Says CFRA analyst Aran Sundaram: “Target is likely struggling more than other big-box retailers given its sales mix is more discretionary in nature (food and beverage is only 20% of annual sales vs. 50%+ for Walmart and Costco), compounded by its lack of fuel stations (a disadvantage when consumers are consolidating shopping trips) and relatively smaller stores, which makes it difficult to store excess inventory without compromising guest experience.”
The other downward pressure Reinking highlighted came from the other side of the world: The Reserve Bank of Australia surprised most economists by raising its benchmark rate by 50 basis points to 0.85% – the country’s largest rate in more than two decades.
“The bank cited soaring inflation as the primary area of attention and noted that additional rate hikes will undoubtedly be required to tame rising prices,” he says, adding that Thursday’s European Central Bank policy meeting should be on market watchers’ radar.
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Energy stocks (+3.0%) were easily the best sector despite a slight decline in U.S. crude oil futures (-0.3% to $118.50) per barrel. Helping the effort there was an upgrade to Exxon Mobil (XOM, +4.6%) shares from Evercore ISI analyst Stephen Richardson, to Outperform (equivalent of Buy) from In-Line (Hold).
The Dow Jones Industrial Average finished 0.8% higher to 33,180, the S&P 500 was up 1.0% to 4,160, and the Nasdaq Composite gained 0.9% to 12,175.
Other news in the stock market today:
- The small-cap Russell 2000 jumped 1.6% to 1,919.
- Gold futures gained 0.5% to settle at $1,852.10 an ounce.
- Bitcoin declined 1.4% to $30,980.47. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
- Kohl’s (KSS) shares surged 9.5% after the …….