The New York Stock Exchange closed lower Wednesday, held back by mixed results from major retailers, although US retail sales remained strong last month.
The Dow Jones index fell 0.12% to 33,553.83 points, the tech-heavy Nasdaq lost 1.54% to 11,183.66 points and the broader S&P 500 index fell 0.83 % to 3,958.79 points.
In the positive news of the day, retail sales grew at a faster-than-expected pace in October at +1.3% versus +1.2% expected.
But this increase was notably attributable to the return of a rise in pump gasoline prices that boosted gas station sales by 4.1% for the month.
“Retail sales weren’t bad, but the problem came from large retailers’ results dragging down other retailers,” Adam Sarhan of 50 Park Investments told AFP.
As a result, department store chain Target reported lower-than-expected quarterly profits and the brand revised downwards its sales targets for year-end celebrations. Target also said it has a plan to cut costs over the next three years.
The stock took a hit, shedding 13.12%, followed by other chain stocks such as electronics specialist Best Buy (-8.54%) or semi-wholesale chain Costco ((0.45%). .
Lowe’s home improvement stores fared better (+2.99%) following better-than-expected quarterly earnings and sales.
Auto Parts, an auto parts chain, fell 15.23% after disappointing quarterly results and lackluster projections.
“Investors are now focusing on retailer accounts and consumer appetite for the future,” commented Adam Sarhan.
“Because retail sales tell us about the past, but investors are interested in what will happen. They want to make sure the consumer keeps buying despite high inflation and rising credit interest rates,” he continued.
From a technology standpoint, component and semiconductor makers suffered and dragged the Nasdaq down.
Micron Technology has warned it will reduce production of wafer chips, used in the manufacture of many electronic devices, citing a slowdown in demand. The stock fell 6.70%.
Nvidia, the maker of video game graphics cards in particular, closed down 4.54%, shortly before reporting its post-close results.
The bout of semiconductor weakness also affected AMD (-4.81%), Qualcomm (-4.20%), Intel (-3.84%) but also Tesla (-3.86%).
Among the macroeconomic news affecting the indices, US industrial production fell slightly in October (-0.1%) and that of September was revised sharply downwards.
“The strength in retail sales despite higher borrowing costs is encouraging, but manufacturing activity is slowly succumbing to the general malaise,” said Paul Ashworth of Capital Economics.
UK inflation rose to 11.1% year-on-year in October, a new 41-year high, driven by a further rise in energy costs.
Uruguayan payments firm DLocal, listed on the Nasdaq, saw its shares plunge more than 50% to $10.46 after an investment fund indicated it was shorting the stock.
In the bond market, yields on 10-year Treasuries fell to 3.69% from 3.76% the day before.
A US central bank (Fed) governor on Wednesday expressed support for a slower rate hike at its upcoming meeting in mid-December, citing a half-percentage point hike, versus three-quarters of a point at the last few meetings.