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Stock futures are flat as investors digest more retail earnings, await Fed minutes

Stock futures are flat as investors digest more retail earnings, await Fed minutes

18 Aug 2021

S&P 500 futures were little changed on Wednesday as investors awaited the release of the Federal Reserve’s latest meeting minutes in order to better decipher when the central bank may start removing stimulus. Investors also waded through more results from big retailers Target and Lowe’s.

S&P 500 futures were essentially flat, down less than 1 point. Dow Jones Industrial average futures shed 52 points, or 0.1%, after it snapped a 5-day winning streak on Tuesday. Nasdaq 100-futures were higher by 0.2%.

The Federal Reserve publishes its meeting minutes from its July gathering at 2 p.m. ET. Market participants will be looking for clues about when the central bank could start dialing back its monthly bond buying program. Since that July meeting, there’s been growing support within the Fed to announce a tapering in September and then begin it in October. The 10-year Treasury yield was about flat around 1.27% on Wednesday ahead of the release.

Shares of Target pulled back by 3% in premarket trading even after what appeared to be stellar results. Target’s earnings and revenue topped expectations and the company raised its forecast for the second half of the year, citing a good start to back-to-school spending. Target shares are up 44% this year through Tuesday so some investors may be taking profits.

Shares of Lowe’s jumped 3% in premarket trading after earnings last quarter topped expectations, with higher sales to home professionals.

ViacomCBS shares popped 2% in premarket trading after Wells Fargo upgraded the stock, saying it can soar more than 50% on the back of strong streaming growth and possible industry consolidation.

On Tuesday, the major averages dipped following a decline in July retail sales. The Dow Jones Industrial Average lost 282 points, dragged down by a 4.3% drop in Home Depot’s stock. The average had its first negative day in 5.

The S&P 500 also slipped 0.7% for its worst day since July 19. The Nasdaq Composite was the relative underperformer, dropping 0.9% as Facebook, Amazon, Apple and Google-parent Alphabet all closed lower.

“The stock market is way overdue for a correction, Covid cases continue to spike higher darkening economic reopenings, consumer data shockingly has collapsed recently — including consumer confidence last Friday and retail sales and homebuilders’ sentiment [Tuesday] — several stocks have stopped reacting positively to good earnings, inflation reports remain hot, and Federal Reserve taper talk is everywhere,” Jim Paulsen, chief investment strategist at the Leuthold Group, said.

The Census Bureau said Tuesday that retail sales fell 1.1% in June, driven largely by a drop in car sales. Economists expected retail sales to fall by 0.3% in July, compared to a revised 0.7% gain in June, according to Dow Jones consensus forecast. Excluding autos, sales were down 0.4% compared to estimates of a 0.2% slowdown.

The small cap benchmark Russell 2000 dropped 1.2% on Tuesday.

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Cisco Systems and Nvidia report after the bell. Stock trading app Robinhood releases its first earnings report as a public company on Wednesday after the bell.