U.S. Indexes Advance 1% After Volatile Session

Barry Adams
07 Jun, 2022
New York City

Stocks were under pressure after Target issued an earnings alert highlighting inventory challenges but managed to shake off recession worries and climbed higher. 

The S&P 500 index increased 0.95% to 4,160.50 and the Nasdaq Composite index advanced 0.94% to 12,175.25. 

Target Inc dropped 2.02% to $156.65 after the diversified retailer announced a plan to lower inventories of unwanted products, cancel orders, and markdown excess products. 

The company had warned about its inventories problems during the release of latest quarter earnings. 

The swift action to deal with inventories will come at the expense of earnings and operating margins. 

The retailer lowered its operating margin estimate to 2%, lower than the previous estimate of 5.3%, and estimated a second-half operating margin of 6%. 

The company reiterated its full-year revenue increase in the low- to mid-single digit and expects to maintain or gain market share in 2022. 

 After the Target announcement, Walmart Inc dropped 1.3% to $123.30. 

Stocks closed higher on Tuesday but retailers remained under pressure. Energy stocks led the gainers again after crude oil prices advanced to a new 8-year high. 

Crude oil futures of immediate month gained $1.50 to $120.05 a barrel and natural gas futures edged up a cent to $9.33 a unit. 

Investors are still confronting rising energy prices and elevated inflation pressures and assessing the health of the U.S. economy and consumers. 

The yield on 10-year Treasury notes decreased to 2.98%. 

The U.S. trade deficit shrank in April to $87.1 billion after imports fell on account of supply chain disruptions and lockdowns in China.

Exports of goods and services rose 3.5% to $252.6 billion and imports declined 3.4% to $339.7 billion. 

Apple Inc advanced 1.8% to $148.78 after the company released several new products at its annual conference for developers. 

J.M. Smucker jumped 5.7% to $130.31 after the pet food, coffee, and other food products maker reported 6% in net sales on 10% price increase across all business segments. 

Net income jumped 37% to $202.1 million. 

Investors are looking ahead to consumer price index data on Friday and hoping that the inflation measure shows a decline offering a respite to consumers and investors. 

In Europe, market indexes turned lower after German factory orders declined for the third month in a row in April. 

The German statistics office said orders fell 2.7% from March and plunged 6.2% from a year ago on weak foreign demand and harsh China lockdown measures.  

A separate report from the German Machinery Industry Trade Association said machinery orders declined 7% in April from a year ago on slower growth demand from China, supply chain disruptions, and the Ukraine war. 

The orders declined for the second month in a row and domestic orders plunged 17% and orders from foreign markets fell 2%. 

The DAX index declined 0.7% to 14,556.22, the CAC-40 dropped 0.7% to 6,500.35, and the FTSE 100 index fell 0.1% to 7,598.93. 

The U.K. Prime Minister Boris Johnson survived a no-confidence vote after 211 of 359 Conservative Party members of parliament expressed confidence in his premiership. 

Prime Minister Johnson led the party to its largest victory in many decades but with multiple scandals voters discontent is rising and several members of his party are looking for a leadership change. 

However, Prime Minister Johnson has a tough road ahead in keeping his job as 148 members expressed dissatisfaction with his leadership, just shy of majority 180 needed to remove him from his office.