Stocks ended lower Wednesday as a weaker-than-expected reading on retail strength from Target (TGT) offset market relief following reports that a missile which struck a small town in Poland likely wasn't fired from Russia.
The missile, which landed late yesterday in the small Polish village of Przewodow, around 4 miles from the Ukraine border, could have been linked to Ukraine's air defense system, a U.S. government official told the Associated Press, while President Joe Biden told reporters on the sidelines of the G20 Summit in Bali that it was "unlikely in the lines of the trajectory that it was fired from Russia" but stressed the NATO allies would continue to investigate.
Reports of the rocket last night pared gains on Wall Street, and held down stocks overnight in both Asia and Europe, but with headlines suggesting an easing in tensions, traders shifted out of the U.S. dollar, a typical safe-haven amid geo-political instability, in a move that allowed for modest gains in U.S. equity futures.
The U.S. dollar index was marked 0.1% lower against a basket of its global peers at 106.094 while benchmark 2-year note yields eased to 4.361% in early New York trading while 10-year notes dipped to 3.736%
Stocks are likely to remain focused on retail and consumer strength again today, with earnings from Lowe's (LOW), Target (TGT) and TJX Companies (TJX) hitting the tape following a stronger-than-expected third quarter update from Walmart (WMT) yesterday that suggested solid, although by no means spectacular, holiday quarter sentiment.
Target's muted near-term outlook, however, took the steam out of the sector's Tuesday rally, as CEO Brian Cornell noted a "meaningful" shift in spending habits linked to what he said was "inflation, rising interest rates and economic uncertainty."
Looking into the final months of the group's fiscal year, Target said it sees a low single-digit decline in same store sales over the holiday quarter, with an overall operating margin of 3%, down from 3.9% over the third quarter and 8.4% over the same period last year.
Shares in the group slumped 14.5% in early trading to change handsa t $153.20 each.
The Commerce Department published its October reading of retail sales at 8:30 am Eastern time, with the headline figure rising by a better-than-expected 1.3%, thanks in part to higher gasoline prices, with a firmer 0.7% increase for the so-called control measure that strips out food, energy, gas, building materials and other volatile costs.
The S&P 500 ended down 0.83%, while the Dow Jones Industrial Average lost 39 points, or 0.12%, to 33,553. The tech-focused Nasdaq lost 1.54% following a near-term warning on chip demand from Micron Technology (MU).
In terms of individual stocks, Nvidia (NVDA) shares fell 4.5% ahead of the chipmaker's third quarter earnings after the closing bell later today, with investors focused on the strength of its data center business to offset weakness in gaming sales.
Lowe's jumped 3% after it posted stronger-than-expected third quarter earnings, while boosting its full-year profit forecast, as home improvement demand continues to drive the bottom line of the country's biggest retailers.
Estee Lauder Companies (EL) shares dipped 1.8% after the cosmetics group confirmed a $2.3 billion takeover of luxury brands collection Tom Ford.
Apple (AAPL) shares were marked nearly 1% lower following a report that suggested the tech giant will pivot from its reliance on an Asia-centric supply chain and source new chips from a planned factory in Arizona.
In overseas markets, concerns over rising geo-political tensions in Europe, as well as another report on rising Covid infections on China kept stocks in the red, with the MSCI ex-Japan benchmark falling 0.41% into the close of trading.
In Europe, London's FTSE 100 was marked 0.03% lower, while the pound jumped to 1.1900 against the U.S. dollar, as investors bet on accelerated rate hikes from the Bank of England following data showing inflation surged 11.1% -- the fastest in 41 years -- over the month of October.
The region-wide Stoxx 600 was marked 0.86% lower in the opening hours of trading in Frankfurt.
