Stock futures fell on Wednesday after disappointing results from another major retailer and comments from Federal Reserve Chairman Jerome Powell on the Fed’s efforts to fight inflation.
Dow Jones Industrial Average futures fell 161 points, or 0.49%, to 32,420, while S&P 500 futures lost 0.67% and tech-heavy Nasdaq futures lost 0.99%.
Target (TGT) – Get Target Company Report Shares tumbled after the Minneapolis giant reported first-quarter earnings that missed analysts’ expectations.
Lowe’s (LOW) – Get the Lowe’s Companies, Inc. report Shares were also lower after the Mooresville, N.C., home improvement chain reported first-quarter net income that beat estimates and fell short.
“Now that spring is finally here, we are pleased with the improved sales trends we saw in May,” said CEO Marvin Ellison.
Target’s earnings miss comes a day after Walmart (WMT) – Get the Walmart Company Report The world’s largest retailer reported lower-than-expected first-quarter earnings and lowered its full-year profit forecast as soaring costs eroded profits at the world’s largest retailer.
Stocks closed higher on Tuesday on news that Shanghai had no new coronavirus infections for the third day in a row despite a disappointing report from Walmart. It’s an important benchmark that could trigger an easing of restrictions on business and travel in China’s largest city.
The city of 25 million reported no new infections in the community for the fourth day in a row, maintaining its cherished “zero-coronavirus” status, Reuters reported.
‘There may be some pain involved’
Powell said the Fed was determined to reduce inflation and reiterated its hope that doing so would not lead to a spike in unemployment. The Fed is aggressively raising interest rates to reduce price pressures.
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In an interview with The Wall Street Journal’s All Things Future, he hinted that in June and July, the central bank could repeat the 0.5 percentage point rate hike it implemented earlier this month.
“The restoration of price stability is an unconditional need. It’s something we have to do,” he told The Wall Street Journal. “There may be some pain.”
The U.S. Commerce Department reported that single-family home construction and permits fell in March as higher mortgage rates led to higher costs, Reuters reported.
Economists polled by Reuters had forecast starts to fall to 1.765 million vehicles.
Mortgage rates topped 5% for the first time in a decade. Housing remains in short supply, which bodes well for the homebuilding industry.
The latest figures show a huge backlog of homes that have been approved to build but have not yet started.
JPMorgan (JPM) – Get JPMorgan Chase & Co. Report Shareholders voted against the company’s proposal to pay CEO Jamie Dimon a $50 million retention bonus as part of the compensation package.
At the annual meeting, less than a third (31%) of the banking giant’s shareholders voted in favor.
The vote was not binding, but the Journal called it a rare rebuke of Dimon’s leadership of the company. Dimon will receive $34.5 million in compensation in 2021.