Major Averages Down On Retail Weakness, Target Net Income Fell 50%

Barry Adams
16 Nov, 2022
New York City

Stocks on Wall Street headed lower after Target issued gloomy holiday sales outlook and investors digested latest retail sales and industrial output data. 

Retail sector stocks were on the decline after Target Corp reported a sharp fall in its latest quarterly earnings but showed a marked improvement in its bloated inventories. 

But what ailed the market was the gloomy outlook for the holiday period as the retailer said consumers are sticking to the basics and avoiding full-price items and discretionary purchases. 

The S&P 500 index fell 0.5% to 3,971.78 and the Nasdaq Composite index dropped 1.4% to 11,199.00. 

Crude oil fell $2.30 to $84.55 a barrel and natural gas futures declined 23 cents to $5.81 a thermal unit. 

The yield on 2-yearTreasury notes increased to 4.37%, 10-year Treasury notes declined to 3.87% and 30-year bonds dropped to 3.92%. 

 

Resilient Consumers Support Retail Sales  

Retail sales rose in October driven by higher auto and gasoline sales but the weakness in electronics and appliance sales persisted, the U.S. Census Bureau reported Wednesday. 

Retail sales, unadjusted for inflation, rose 1.3% in October from September and 8.3% from a year ago, on a rebound in auto and gasoline sales.

Auto dealers sales increased 1.3% from September and 5.2% from a year ago after supply chain problems eased and gasoline stations sales rose 4.1% and 17.8% respectively. 

Department stores and electronics and appliance were the only two categories where sales declined from the month and a year ago. 

Electronics and appliances sales in October declined 0.3% from September and plunged 12.1% from a year ago. 

Department store sales declined 2.1% from September and dropped 1.6% from a year ago. 

Food services and drinking places sales increased 1.6% from September and 14.1% from a year ago.  

 

Industrial Output Declined

Industrial output declined 0.1% in October from the downwardly revised 0.1% increase in September. 

Capacity utilization rate increased by 0.2 percentage points to 79.9%, the Federal Reserve reported Wednesday. 

Total industrial production in October was 3.3% higher than a year ago. 

 

U.S. Movers 

Advance Auto Parts plunged 16.3% to $153.77 after the retailer reported mixed quarterly results and reiterated weak annual outlook.

Carnival Corp dropped 12.9% to $9.71 after the cruise operators said it plans to offer $1 billion of convertible debt as part of its debt refinancing plan.

Lowe's Companies soared 5.5% to $220.18 and the home improvement retailer lifted its full-year earnings outlook and said U.S. comparable sales rose 3%.

Target stock plunged 13.4% to $154.79 after the retailer said third quarter earnings fell, lowered its fourth quarter outlook and estimated weak holiday sales.