By Wallace Witkowski and Anora Mahmudova, MarketWatch
Lowe's shares slump after earnings miss
U.S. stocks closed lower Wednesday on light volume, with the
main indexes undoing some of the solid gains from the previous
session as investors turned their attention to the Jackson Hole,
Wyo., meeting of global central bankers and digested comments from
President Donald Trump's Tuesday night rally in Phoenix.
The Dow Jones Industrial Average closed down 87.80 points, or
0.4%, at 21,812.09, with shares of Johnson & Johnson Inc.(JNJ),
Walt Disney Co. (DIS) and Cisco Systems Inc. (CSCO) leading
decliners.
On Tuesday the blue-chip index rallied almost 200 points for its
biggest gain since April 25
(http://www.marketwatch.com/story/dow-sp-set-for-2nd-day-of-gains-as-rebound-continues-2017-08-22),
after reports that Trump was making progress in shaping a plan for
tax reform. Still, even with Tuesday's rally, the Dow has not
gained 1% or more in a single day since April 25, its longest
streak without a 1% or more gain since March 2007
(http://www.marketwatch.com/story/dow-industrials-on-pace-to-log-longest-streak-without-a-1-gain-in-about-1012-years-2017-08-23),
according to Dow Jones data.
The S&P 500 index fell 8.47 points, or 0.4%, to 2,444.04,
with eight out of its 11 main indexes finishing lower.
Consumer-discretionary and industrial shares led the losses, down
0.8% and 0.9%, respectively.
The technology-laden Nasdaq Composite Index declined 19.07
points, or 0.3%, to 6,278.41.
Trading volumes were still light, with 2.76 billion shares
exchanging hands on the New York Stock Exchange, and 1.51 billion
shares on the Nasdaq at the close. August average daily volumes are
well below the year-to-date averages. Month to date, average daily
volume for the NYSE is 3.16 billion shares and 1.84 billion shares
for the Nasdaq, according to Dow Jones data.
Wednesday's modest bout of selling could be partly due to
controversial comments from Trump, who late Tuesday said that he's
ready to shut down the government to win funding for a border wall
with Mexico
(http://www.marketwatch.com/story/trump-threatens-shutdown-over-border-wall-funding-predicts-end-of-nafta-2017-08-22).
House Speaker Paul Ryan, however, played down the idea of a
government shutdown
(http://www.marketwatch.com/story/paul-ryan-pushes-back-against-trumps-shutdown-comments-2017-08-23)
on Wednesday.
See:Trump 'shutdown' threat rattles stock market
(http://www.marketwatch.com/story/trump-shutdown-threat-rattles-stock-market-2017-08-23)
Trump, during a rally with his supporters in Phoenix, also
warned of the possible termination of the North American Free Trade
Agreement.
"You've got a combination of not a lot of data before Jackson
Hole and low volume with optimistic views reversing with some of
the president's comments," said Bill Stone, global chief investment
strategist at PNC Asset Management Group, in an interview.
"It's very difficult to forecast how political machinations are
running," Stone said. "We'll still see a tax cut because the
Republican Congress has to show some progress. I think it's easier
to coalesce around tax cuts, but normally, optimism one day leads
to disappointment the next."
Some analysts suggested that investors are more concerned about
interest rates than political turmoil emanating from
Washington.
Read:Do stock-market investors really care about Gary Cohn and
the Trump agenda?
(http://www.marketwatch.com/story/do-stock-market-investors-really-care-about-gary-cohn-and-the-trump-agenda-2017-08-22)
"Markets have been inured to the dysfunction in the
administration. But people are waking up to the fact that interest
rates, used as discount rates to calculate future cash flows, are
rising. It is just math that with higher discount rates multiples
would have to come down," said Kim Forrest, senior analyst and
portfolio manager at Fort Pitt Capital Group.
Forward multiple or price-to-earnings ratio, a measure of equity
values, of the S&P 500 are at 17.4 times, representing the
highest level in more than a decade, according to FactSet.
Jackson Hole: The impending Kansas City Federal Reserve Bank's
central-bank symposium in Wyoming is now only one day away. A
dearth of potential trading cues has refocused investor attention
on the meeting, which starts Thursday and runs through
Saturday.
"The conference comes at a critical moment for central banks,
especially the ECB and Fed," said Neil Wilson, senior market
analyst at ETX Capital, in a note.
Fed Chairwoman Janet Yellen and European Central Bank President
Mario Draghi are among the top speakers on Friday, with investors
hoping to get hints on the future monetary policy path from both
institutions.
"After years of accommodation, the dial is shifting, albeit
glacially," Wilson said. "We're about to enter uncharted water:
Unwinding QE has never been done before, but it's about to be tried
on markets that have this year exhibited a degree of calm that is
worrisome when you consider what may be coming."
See:Here's what investors will be watching when Draghi, Yellen
speak at Jackson Hole
(http://www.marketwatch.com/story/heres-what-investors-will-be-watching-when-draghi-yellen-speak-at-jackson-hole-2017-08-22)
Earlier Wednesday, the greenback pulled back in anticipation of
the event, and by the close the ICE Dollar was flat at 93.15.
Economic news: The purchasing managers index fell to 52.5, a
two-month low, in August, while the services business activity
index rose to 56.9, the highest level in 28 months. Separately, a
reading of new homes sales fell 9.4% in July.
See:MarketWatch's economic calender
(http://www.marketwatch.com/economy-politics/calendars/economic)
Stock movers: Shares of Lowe's Cos. (LOW) finished down 3.7%
after the home-improvement retailer reported adjusted earnings and
revenue that missed forecasts
(http://www.marketwatch.com/story/lowes-shares-slide-6-as-company-guides-lower-but-analysts-see-big-upside-2017-08-23).
U.S.-listed shares of WPP PLC (WPP.LN) plunged more than 11%
after the advertising giant cuts its growth outlook after a drop in
revenue
(http://www.marketwatch.com/story/wpp-cuts-growth-view-as-client-spending-drops-2017-08-23).
Similarly, shares of rivals Omnicom Group Inc.(OMC) fell 7% and
Interpublic Group of Cos.(IPG) dropped 6.3%.
Coty Inc.(COTY) shares fell further Wednesday, down 5.5%, after
the beauty products company reported weak results on Tuesday
(http://www.marketwatch.com/story/coty-shares-fall-after-earnings-miss-2017-08-22).
Foot Locker Inc.(FL) shares rose 6.2%, moving higher for the
week following a series of downgrades from poor earnings and a big
selloff on Friday
(http://www.marketwatch.com/story/foot-locker-shares-plunge-26-as-brands-like-nike-and-adidas-go-direct-to-consumer-2017-08-18).
Salesforce.com Inc.(CRM) rose 0.1% after the cloud-software
company late Tuesday reported earnings that were better than
expected
(http://www.marketwatch.com/story/salesforce-beats-on-earnings-and-increases-guidance-but-stock-falls-2017-08-22).
Shares of Intuit Inc. (INTU) fell 1.9% after the financial
software provider late Tuesday reported earnings that beat
forecasts
(http://www.marketwatch.com/story/intuit-stock-down-after-hours-on-fourth-quarter-earnings-and-cfo-change-2017-08-22),
but also said its Chief Financial Officer R. Neil Williams will
step down in January.
Other markets: There was no trading in Hong Kong, with the Hang
Seng Index halted as category-10 Typhoon Hato slammed into the area
(http://www.marketwatch.com/story/hong-kong-stock-market-closed-as-severe-typhoon-hits-2017-08-23).
Other Asian stock markets
(http://www.marketwatch.com/story/asian-markets-gain-despite-jackson-hole-uncertainties-2017-08-22)
closed mostly higher. European equities finished lower
(http://www.marketwatch.com/story/european-stocks-tilt-lower-even-as-factory-activity-stays-strong-2017-08-23).
Oil prices
(http://www.marketwatch.com/story/oil-prices-slide-as-confusion-over-libyan-production-reigns-2017-08-23)
rose 1.2% to settle at $48.41 a barrel after data showing a decline
in U.S. crude supplies, while gold
(http://www.marketwatch.com/story/gold-higher-as-dollar-nicked-by-economic-agenda-uncertainty-2017-08-23)prices
advanced 0.3% to settle at $1,294.70 an ounce.
--Sara Sjolin in London contributed to this report.
(END) Dow Jones Newswires
August 23, 2017 16:30 ET (20:30 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.