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Wall Street ends lower as retailers stoke inflation fears

Stock MarketsNov 17, 2021 06:56PM ET
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© Reuters. FILE PHOTO: People are seen on Wall Street outside the New York Stock Exchange (NYSE) in New York City, U.S., March 19, 2021. REUTERS/Brendan McDermid/File Photo

By David French

NEW YORK (Reuters) - Wall Street benchmarks ended Wednesday lower on inflation fears and supply chain concerns stemming from retailers' earnings, with investors betting the Federal Reserve will raise interest rates sooner than expected to tame rising prices.

Target Corp (NYSE:TGT) was the latest big-name retailer to report positive results, upping its annual forecasts and beating profit expectations, citing an early start to holiday shopping.

But shares of the firm fell 4.7%, tracking declines in those of peer Walmart (NYSE:WMT) on Tuesday, as both retailers flagged a hit to their third-quarter margins from supply chain issues.

Other retailers yet to report earnings traded lower. Macy's Inc (NYSE:M) and Kohls Corp dropped 4.5% and 3.1% respectively, ahead of posting numbers on Thursday morning, and Gap Inc (NYSE:GPS) and Urban Outfitters Inc (NASDAQ:URBN), on deck next week, slipped 5.2% and 4.2%.

Some retailers bucked the trend. TJX Companies Inc (NYSE:TJX) gained 5.8%, its highest finish since Aug. 27, after the T.J. Maxx owner reported estimate-beating earnings, an increase in its share buyback program, and forecast it was well positioned to meet holiday-season demand.

Lowe's (NYSE:LOW) Cos Inc rose 0.4% after the home improvement chain raised its full-year sales forecast on higher demand. Peer Home Depot (NYSE:HD) had also reported strong results on Tuesday.

The Dow was also weighed by Visa Inc (NYSE:V), which slumped 4.7% after Amazon.com Inc (NASDAQ:AMZN) said it would stop accepting cards issued by the operator in the UK due to the high transaction fees.

While strong retail data this week showed a rise in inflation has not stifled economic growth so far, investors fear that further increases in prices could hurt growth and push the Federal Reserve into tightening policy ahead of schedule.

"You've got inflation at a 31-year high, but we're at the lowest interest rates we've ever had, so those things just don't connect," said Salem Abraham, portfolio manager of the Abraham Fortress Fund.

He added while supply chain issues would ease as COVID moved to endemic status, the huge increase seen in money supply would ensure inflation would remain a serious problem for years.

Contrasting comments from Fed Presidents James Bullard and Mary Daly on Tuesday also brewed more uncertainty in markets.

"The Fed will hold as long as they can ... But if (inflation) continues to go higher, and you continue to see inflationary pressure, then it becomes a question of how many and how often will (rates) rise," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

Strong retail earnings this week will round off an upbeat third-quarter earnings season, which had pushed Wall Street indexes to record highs.

Chipmaker Nvidia (NASDAQ:NVDA) Corp dropped 3.1% ahead of its earnings reported after the bell on Wednesday. The wider Philadelphia semiconductor index ended 0.7% lower after a record finish the previous day.

The Dow Jones Industrial Average fell 211.17 points, or 0.58%, to 35,931.05, the S&P 500 lost 12.23 points, or 0.26%, to 4,688.67 and the Nasdaq Composite dropped 52.28 points, or 0.33%, to 15,921.57.

Electric vehicle makers were broadly positive. Tesla (NASDAQ:TSLA) and Canoo both gained 3.3%, the latter after forecasting it would start U.S. production sooner than expected. Sono Group NV surged 155% on its Nasdaq debut.

But Rivian Automotive Inc tumbled 15.1% as investors locked in gains from a near 71% winning streak since the stock's listing last week.

Volume on U.S. exchanges was 10.6 billion shares, compared with the 11.09 billion average for the full session over the last 20 trading days.

The S&P 500 posted 41 new 52-week highs and six new lows; the Nasdaq Composite recorded 115 new highs and 244 new lows.

Wall Street ends lower as retailers stoke inflation fears
 

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Comments (9)
Oldfashioned Owl
Oldfashioned Owl Nov 18, 2021 5:45AM ET
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Everyday ups & down need not explained you know.
Chris Hall
Chris Hall Nov 17, 2021 10:35PM ET
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crash the system start over
Fong SH
Fong SH Nov 17, 2021 8:53PM ET
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What inflation fears? when US debts is so high. Another excuse to sell down stock markets After all these years of reporting, am numbed with all these figures
Ying Yu
Ying Yu Nov 17, 2021 4:19PM ET
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Yesterday's data is good for trap more immature investors.
William Bailey
William Bailey Nov 17, 2021 1:59PM ET
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No worries ! Yellen will be fine and well cared for, in her mansion, by her servants!!! She said infation is not an issue!! I feel so much better about the 5-mile-long line of campers and cars people are living in on a frontage road in Marin Counry, Ca. !
Wright gillard
Wright gillard Nov 17, 2021 1:50PM ET
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the inflation still there maybe there will  be consistent rise on USD.  BTCUSD is approaching higher again maybe i will trade that
Radium King
Radium King Nov 17, 2021 12:52PM ET
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Fear not. Only shorts are expecting a rate hike and they got burnt multiple times this year. Fed will NOT raise the interest rate before most shorts get margin called.
taylor jason
taylor jason Nov 17, 2021 12:52PM ET
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such a naive post -- fed themselves said they are on track to raise next year, question is when. fed fund futures are pointing to june and December. I will also note the fed often acts according to market expectations
Radium King
Radium King Nov 17, 2021 12:52PM ET
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Lol, good luck, if you are shorting.
taylor jason
taylor jason Nov 17, 2021 12:52PM ET
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I didn't even say what my position is lmao. way to speculate incorrectly. another chad that thinks this is merely another short vs long situation while ignoring the data/facts. I recommend reading the commentary from the fed over the past few months, and observe how their language regarding inflation has been subtlety changing and becoming more focused on it
Ivan Ivan
Ivan Ivan Nov 17, 2021 12:48PM ET
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The inflation isn't the case anymore (statistics shows that it's have been coused by problems in tge supply chance but not a fundamental reasons). There won't be a rate hike.
taylor jason
taylor jason Nov 17, 2021 12:48PM ET
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link the statistics you speak of -- also there aren't many models that are built to track supply side inflation
Steffen vdm
Steffen vdm Nov 17, 2021 12:48PM ET
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that's what they want to make you believe so they can load their pockets
Ayumastura PinkLady
Ayumastura PinkLady Nov 17, 2021 12:30PM ET
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see everything seems negative. If no rate hike, market down due to inflation. Now down afraid of rate hike.
 
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