The S&P 500 and the Dow Jones indexes retreated from record levels on Tuesday as dour forecasts from Home Depot and Kohl’s eroded confidence that the U.S. consumer will support the economy.
However, the tech-heavy Nasdaq rose 0.3%, supported by gains in shares of Microsoft Corp, Facebook Inc and Broadcom Inc.
Home Depot Inc fell 5% and was the top drag on the S&P 500 and the Dow after the U.S. home improvement chain cut its 2019 sales forecast for the second time this year.
Kohl’s Corp slumped 17.6% as the department store operator slashed its annual profit forecast after falling short of quarterly comparable sales and earnings estimates.
“At the moment the consumer sentiment is still strong but that doesn’t mean it is going to reflect in every retailer’s earnings,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin.
Other retail stocks also fell at the news, driving the S&P 500 retail index down 1.1%. Investors await reports from Lowe’s Cos Inc, Target Corp and Nordstrom Inc among others this week for clues on consumer confidence and spending.
Seven of the 11 major S&P 500 sectors were lower, with the consumer discretionary index’s 0.82% drop weighing the most.
The three main U.S. stock indexes had opened higher on continued optimism that Washington and Beijing would agree on a deal to end a damaging trade war.
“Markets have probably risen a little too far … so it is no surprise that we are seeing some pause here,” Frederick added.
Expectations of a trade deal and a largely better-than-expected third-quarter corporate earnings season have fueled a Wall Street rally over the past few weeks, with the S&P 500 setting new records almost every day.
At 11:50 a.m. ET, the Dow Jones Industrial Average was down 108.99 points, or 0.39%, at 27,927.23; the S&P 500 was down 1.17 points, or 0.04%, at 3,120.86.
The Nasdaq Composite was up 21.84 points, at 8,571.78.
Growing uncertainty over an ongoing U.S. impeachment inquiry into President Donald Trump limited gains in markets.
Minutes from the Federal Reserve’s latest policy meeting, where it cut interest rates for the third time this year, will be released on Wednesday.
Among other stocks, AT&T Inc fell 3.5% after MoffettNathanson downgraded the U.S. wireless carrier’s stock to “sell” from “neutral”.
Chipmaker Broadcom rose 3.1% after Morgan Stanley upgraded its shares to “overweight” from “equal-weight”.
Advancing issues outnumbered decliners by a 1.08-to-1 ratio on the NYSE and by a 1.60-to-1 ratio on the Nasdaq.
The S&P index recorded 38 new 52-week highs and two new lows, while the Nasdaq recorded 77 new highs and 85 new lows.