Dow Set to Open Down as the Market Braces for Retail Earnings
Stock futures were broadly flat before the market opened on Tuesday ahead of a raft of earnings from big-name retailers.
Home Depot, the nationwide chain for do-it-yourself renovators, reports results from the latest quarter before the exchange starts trading today. Mass market retailers Target and TJX are up on Wednesday. Walmart, the biggest U.S. retailer by revenue, and Ross Stores are out on Thursday.
While official data suggest consumer spending held up well in the second quarter, investors will be closely watching forecasts for the coming months. A weakening job market and the impact of President Donald Trump’s new taxes on imports are risks to the outlook.
The signs of a slowdown in growth ahead is one reason investors are expecting the Federal Reserve to lower interest rates for the first time since December next month. Chair Jerome Powell’s speech in Jackson Hole, Wyoming will add color to the picture on Friday. A rate cut should be good for stocks because it encourages shoppers to spend by lowering returns on savings.
“The market is all but pricing in a certainty for rate cuts in September and we agree with the market’s expectations,” said Stephen Schwartz, a founding partner at Pioneer Financial. “Rate cuts are warranted as financial conditions are too tight right now given the softening of the inflation data and the cracks we are starting to see in the labor market.”
Prospects for a resolution to the conflict in Ukraine could also move the market this week. Trump met with Ukraine President Volodymyr Zelensky and European leaders at the White House Monday, and afterwards said Zelensky and Russia’s President Vladimir Putin should hold one-on-one talks as the next step.
Dow Jones Industrial Average futures were edging up 22 points, or less than 0.1%. S&P 500 futures were lipping less than 0.1%, as were Nasdaq 100 futures. All three indexes finished the day more or last flat on Monday.
The yield on the 10-year Treasury rose slightly to 4.347%, compared with 4.297% 24 hours ago. The two-year yield also ticked up to 3.777%.