Stock market indexes reduced losses at midday Tuesday morning as a report showed a strong U.S. consumer but concerns grew about China's economy. Home Depot climbed above a buy point after its earnings report but faded.
The S&P 500, Nasdaq composite and Dow Jones Industrial Average were all down about 0.6% after falling about 1% earlier. The Russell 2000 was off 1.1%.
Volume rose on the Nasdaq and fell on the NYSE compared with the same time on Monday.
Among major stocks, Tesla was down 1.8%. The EV company introduced shorter-range versions of its Model S and Model X and cut the U.S. price tag on its base luxury electric vehicles by $10,000.
Financials were among the weakest sectors in today's stock market, with the Financial Select Sector SPDR ETF down 1.4%.
Fitch Ratings warned of more trouble ahead for the U.S. banking industry. The ratings agency said it may downgrade dozens of banks, including JPMorgan Chase. JPM fell 2.7%, slipping below the 21-day exponential moving average.
The Innovator IBD 50 ETF trimmed losses to 0.7%. If it closes down, it would be its ninth drop in 11 sessions.
The main drag on the IBD 50 was On Holding, which sold off 13.5% in heavy volume after earnings came out. The stock gapped below the 50-day moving average, causing a sell signal. The sneaker maker's adjusted earnings slid 66% to 5 cents per share, missing expectations.
Retail Sales Jump, Jolt Stock Market
July retail sales rose 0.7% and 1% excluding autos. Both exceeded forecasts of 0.4% increases. The gains were the strongest in what is now a four-month streak of increases, said Jennifer Lee, senior economist at BMO Capital Markets. With the U.S. consumer resilient, "the Federal Reserve's life just got a little more complicated," she said.
Indeed, while the data lessened the chance of recession, it also means the Fed has greater leeway to raise interest rates if it wants to.
The 10-year Treasury yield initially spiked to 4.27% after the retail sales report came out. But the yield has been easing since then, and was at 4.18% in midday trading, unchanged from late Monday.
Home Depot, D.R. Horton Makes Bullish Moves
In the first of several major earnings reports for the retail sector, Home Depot reported July-ended quarter earnings that fell 7.9% to $4.65 per share as sales dropped 2% to $42.92 billion. Nonetheless, the results were better than analysts' consensus estimates.
Home Depot, one of the 30 companies in the Dow industrials, also announced a $15 billion stock buyback. Shares rose past the 334.97 buy point of a large cup-with-handle base. But at midday, the stock was back below the entry.
D.R. Horton climbed more than 2% Tuesday at midday, as the stock makes a third bounce off its 50-day moving average since a breakout in March.
Warren Buffett-led investment firm Berkshire Hathaway disclosed a nearly 6 million-share stake in the homebuilder late Monday. Berkshire late Monday also disclosed acquiring smaller stakes in Lennar and NVR. Both stocks erased losses and were moderately higher.
Berkshire also trimmed its stake in General Motors and exited McKesson. GM fell 1.8%, McKesson 0.8%.
Futures: Market Rally Breaks Key Levels
China Stock Market Falls Despite Rate Cuts
Sea Limited plummeted 28% in huge volume, falling to the lowest point since November 2022. The Singapore-based online retail and entertainment company badly missed second-quarter sales estimates.
Chinese stocks continued to drop, even after China's central bank unexpectedly cut key interest rates. It was an emergency move to shore up the economy after data showed more decay.
Earlier, a series of economic reports showed weakening consumer spending, industrial production and public and private investment in China.
The Shanghai composite fell 0.1% while the Hong Kong Hang Seng slid 1%. The iShares MSCI China ETF fell 1.5%, on pace for a third straight day below the 50-day moving average.
