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US STOCKS-Futures flat after grim Target forecast, retail sales data awaited

Reuters · 11/16/2022 08:11
US STOCKS-Futures flat after grim Target forecast, retail sales data awaited

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Target's dour outlooks weighs on retailers

Retail sales data due at 8:30 a.m. ET

Futures: Dow up 0.02%, S&P up 0.03%, Nasdaq down 0.01%

Updates prices throughout, adds comment

By Bansari Mayur Kamdar and Ankika Biswas

- U.S. stock index futures were flat on Wednesday after retailer Target gave a downbeat holiday-quarter forecast, while investors also assessed the latest developments following reports on Tuesday of a missile landing in Polish territory Ukraine.

Target Corp TGT.N forecast a surprise drop in holiday-quarter sales due to surging inflation, sending its shares down 13.8% in premarket trading.

The dour outlook knocked down shares of other big U.S. retailers such as Walmart Inc WMT.N, Macy's Inc M.N and Costco Wholesale Corp COST.O between 1% and 4%.

"Overall, it's showing that there's some weakness in the economy with the consumer. We are a consumption-based economy, so you want to see that," said Thomas Hayes, managing member at Great Hill Capital LLC in New York.

Bucking the trend, home improvement retailer Lowe's Companies Inc LOW.N jumped 2.4% after increasing its annual profit forecast on steady demand.

"It's a mixed picture, but at the same time, you get the idea that things are in the process of slowing. It will lower expectations for other retailers," said Hugh Johnson, chief economist of Hugh Johnson Economics in Albany, New York.

The earnings reports come on the heels of upbeat quarterly results from Walmart Inc WMT.N on Tuesday that had added to market optimism driven by a softer-than-expected producer prices report.

All the three main indexes ended higher on Tuesday on hopes that the improved inflation outlook would allow the U.S. Federal Reserve to take a less aggressive approach on interest rate hikes, though geopolitical worries kept investors on edge.

A missile that hit Poland was probably a stray fired by Ukraine's air defenses and a Russian strike, Poland and NATO said on Wednesday, easing global concern that the conflict in Ukraine could spill across the border.

Key retail sales figures due at 8:30 a.m. ET will be parsed for further clues on the impact to consumers' purchasing power from soaring prices. The data is expected to show retail sales increased 1% in October after remaining flat in September.

At 7:34 a.m. ET, Dow e-minis 1YMcv1 were up 8 points, or 0.02%, S&P 500 e-minis EScv1 were up 1.25 points, or 0.03%, and Nasdaq 100 e-minis NQcv1 were down 0.75 points, or 0.01%.

Among other stocks, Peloton Interactive Inc PTON.O gained 0.5% as the exercise equipment maker is set to start selling its exercise bike and other fitness accessories on e-commerce giant Amazon.com Inc's AMZN.O UK store.

Auto parts retailer Advance Auto Parts Inc AAP.N fell 14.4% after lowering its earnings-per-share forecast.

(Reporting by Bansari Mayur Kamdar, Ankika Biswas and Amruta Khandekar in Bengaluru; Editing by Shounak Dasgupta)

((BansariMayur.Kamdar@thomsonreuters.com; Twitter: @BansariKamdar))