By Peter Nurse
Investing.com - U.S. stocks are seen opening lower Wednesday, weighed on by disappointing earnings from a couple of significant retailers, ahead of key economic data releases and the minutes from the last Federal Reserve meeting.
At 7:20 AM ET (1220 GMT), the Dow Futures contract was down 124 points, or 0.4%, S&P 500 Futures traded 15 points, or 0.3%, lower and Nasdaq 100 Futures slumped further, dropping 63 points, or 0.4%.
The retail sector is likely to trade significantly lower Wednesday following the release of weak quarterly earnings from the likes of Gap (NYSE:GPS) and Nordstrom (NYSE:JWN), illustrating the difficulties these stores are having due to the disruptions of their supply chains.
Gap stock is over 18% lower in premarket trading after the clothing chain cut its full-year forecast, expecting a hit to revenue of up to $650 million following factory closures in Vietnam, a region that accounts for 30% of the company’s production.
Similarly, Nordstrom stock fell 26% premarket after warning of product shortages at its stores heading into the holiday season, adding that rising labor costs had cut into its quarterly profit.
On the flip side, HP (NYSE:HPQ) stock was seen trading significantly higher after the computer hardware company’s quarterly sales and earnings easily exceeded market expectations.
Elsewhere, CVS Health (NYSE:CVS), Walmart (NYSE:WMT) and Walgreens (NASDAQ:WBA) will be in the spotlight Wednesday after a federal jury in Cleveland, Ohio, ruled that their pharmacies were complicit in the opioid epidemic.
The main indices differed in performance on Tuesday, with the rising Treasury yields lifting bank stocks but hurting tech and other high-growth companies.
The blue chip Dow Jones Industrial Average closed almost 200 points, or 0.6%, higher, and the broad-based S&P 500 gained 0.2%. The tech-heavy Nasdaq Composite, however, lost 0.5%.
There is a flood of economic data releases to wade through later Wednesday, ahead of Thursday’s Thanksgiving holiday, including the Fed’s favorite gauge of inflation, the core PCE index for October, another reading of the third-quarter GDP and the latest durable goods number.
Of particular interest will be the minutes of the November Fed meeting, with investors searching for clues of the future pace of tapering, and consequently the timetable for interest rate increases.
Crude prices edged higher Wednesday, continuing the previous session’s hefty gains after the announcement of a coordinated release of oil from government reserves underwhelmed.
The U.S. said it will release 50 million barrels, in concert with China, Japan, India, South Korea and the U.K. in an effort to tame prices, but influential investment bank Goldman Sachs estimated that the market had already priced in more than 100 million barrels.
The Energy Information Administration will release the latest official reading of U.S. crude stocks later in the session, after the American Petroleum Institute, an industry body, said Tuesday that inventories climbed 2.3 million barrels last week.
By 7:20 AM ET, U.S. crude futures traded 0.1% higher at $78.56 a barrel, after climbing 2.3% on Tuesday, their biggest gain in two weeks, while the Brent contract inched 0.2% lower to $82.19, having gained 3.3% on Tuesday.
Additionally, gold futures rose 0.2% to $1,787.40/oz, while EUR/USD traded 0.3% lower at 1.1216.