Wall St Drops as Growth Stocks Shift, Target Weighs on Retail Stocks

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US, Aug. 15, 2022. REUTERS/Brendan McDermid

Aug 17 (Reuters) – Wall Street’s major indices fell Wednesday as growth stocks came under pressure after bond yields rose minutes after the Federal Reserve’s July meeting as Target’s weak results hit the retail sector dragged down.

Retail revenues have been mixed so far this week, with Target Corp (TGT.N) falling 3.3% after reporting a 90% decline in quarterly profits as inflation-hit customers curtail spending on discretionary goods. read more

The S&P 500 retail sector (.SPXRT) fell 1.7%, after a 1.9% jump in the previous session on encouraging quarterly results from Walmart Inc (WMT.N) and Home Depot Inc (HD.N).

Data showed US retail sales were flat in July as falling gasoline prices weighed on receipts at gas stations. However, consumer spending appeared to be holding up, which could allay fears of a recession. read more

High-growth and technology stocks such as Amazon.com Inc (AMZN.O) and Nvidia Corp (NVDA.O) each fell more than 2.5% as US Treasury yields rose for the second straight session.

Investors expect the Fed minutes to likely confirm the central bank’s focus on raising interest rates until inflation is under control. read more

“We still have a long way to go from an 8% inflationary pressure to a place where there are normalized rates,” said Charlie Ryan, portfolio manager at Evercore Wealth Management.

“The biggest risk is what we’ll do if we get some bad inflationary pressures this month without the Fed meeting.”

Most of the major S&P 500 sectors were trading in the red by midday, while energy (.SPNY) stocks saw higher tracking gains in crude prices.

The S&P 500 has recovered nearly 17% from its mid-June low, with the latest boost coming from hopes that inflation has peaked after softer-than-expected data earlier this month.

The benchmark also closed close above the 200-day moving average on Tuesday, a key technical level it has not surpassed since early April.

Traders see a near equal chance of a 50 basis point increase and a 75 basis point increase by the Fed in September. FEDWATCH

At 12:03 PM ET, the Dow Jones Industrial Average (.DJI) fell 273.08 points, or 0.80%, at 33,878.93, the S&P 500 (.SPX) fell 45.89 points, or 1.07%, at 4,259.31, and the Nasdaq Composite (.IXIC) fell by 217.65 points, or 1.66%, to 12,884.90.

Positive corporate earnings also contributed to a rebound in US equities this quarter, but some investors are pointing to potential risks to earnings that could undermine momentum. read more

Home improvement chain Lowe’s Cos Inc (LOW.N) rose 0.8% after better-than-expected quarterly earnings. read more

The number of declining issuances surpassed the avant-garde with a 6.06-to-1 ratio on the NYSE and a 3.96-to-1 ratio on the Nasdaq.

The S&P index recorded three new highs in 52 weeks and 29 new lows, while the Nasdaq recorded 24 new highs and 41 new lows.

Reporting by Bansari Mayur Kamdar, Devik Jain and Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta

Our Standards: The Thomson Reuters Trust Principles.