Dow Jones Today: Powell and Retail Do No Harm, Nor Much Help

Stock Market

Stocks swung between gains and losses Tuesday as Federal Reserve Chairman Jerome Powell testified before the Senate Finance Committee, reiterating that the central bank stands ready to support the world’s largest economy if needed.

Source: Provided by Finviz

  • The S&P 500 lost 1.05%.
  • The Dow Jones Industrial Average dropped 1.59%
  • The Nasdaq Composite slipped 0.54%
  • We haven’t discussed Nike (NYSE:NKE) in awhile, but it was the best-performing Dow name today on some encouraging anecdotes from an industry analyst.

Powell’s congressional testimony lacked zeal, through no fault of his own. His reiteration of support for the economy wasn’t new news because he made similar comments in a 60 Minutes interview on Sunday, so the underlying sentiment was already priced into stocks.

Broadly speaking, Tuesday was a ho-hum day for riskier assets, to be expected following Monday’s ebullience. That lethargy was reflected in just 12 of 30 Dow stocks tracking higher late in the session.

Nike Update

As noted above, Nike hasn’t been highlighted here in awhile, but the athletic apparel giant is worth mentioning today.

Raymond James analysts said business was brisk at the company’s Atlanta-area stores last weekend as Georgia began reopening businesses. Yes, that’s just one region, but Atlanta is one of the largest U.S. cities. Moreover, it’s a sign that although retail is taking some lumps at the hands of the novel coronavirus, there’s some consumer strength to speak of, particularly if the U.S. economy can rapidly regain normalcy.

Speaking of Retail…

Some of the air was let out of Home Depot (NYSE:HD) stock today as shares of the home improvement retailer slumped following a first-quarter earnings report. Home Depot earned $2.08 a share on sales of $28.26 billion. Wall Street was anticipating earnings of $2.26 on revenue of $27.28 billion.

Retrenchment in the stock today is likely attributable to the company suspending 2020 guidance, which many companies have done due to Covid-19. However, that may be stoking fears on Wall Street that Home Depot’s banner first-quarter revenue was a one-off created by its status as an essential retailer and not sustainable for the duration of this year.

More Earnings Malaise

Add Walmart (NYSE:WMT) to the list of previously high-flying essential retailers that saw some wind come out of its sails today post-earnings. The world’s largest retailer report earnings of $1.18 on sales of $134.62 billion, beating estimates calling for $1.17 a share on revenue of $130.31 billion. In a familiar refrain heard so often this earnings season, Walmart didn’t offer guidance for the remainder of its fiscal year, citing, you guessed it: the coronavirus.

Departure Dings Disney

The recent recovery in Disney (NYSE:DIS) stock suffered a modest setback today on news that Kevin Mayer, Disney’s head of direct-to-consumer and international operations, is joining Chinese company ByteDance as CEO of the popular social media app TikTok.

Markets didn’t like the news because Mayer was one of the architects of the Disney + streaming service and several of the company’s other streaming brands.

Ominous Sign?

If the sluggishness in Home Depot and Walmart today doesn’t convince investors that some of the air is coming out of the essential retail/products trade, perhaps the following will: Procter and Gamble (NYSE:PG) was the Dow’s worst performer today, shedding more than 3%, and is lower by nearly 7% over the past month.

Bottom Line on the Dow Jones Today

With signs emerging, both in the U.S. and China, that economies are inching toward normalcy, human behavior enters the equation, and as noted above with Nike, that factor shouldn’t be underestimated.

“Part of the challenge is in determining how permanent some of the changes in human behavior may be,” said BlackRock in a note out today. “Our data has found that even as countries and businesses take steps toward normalcy, with restaurants and stores opening their doors, consumers can be slow to return.”

Todd Shriber has been an InvestorPlace contributor since 2014. As of this writing, he did not hold a position in any of the aforementioned securities.

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