Closing Stock Market SummaryThe stock market opened on a softer note and headed lower from there. There were several relatively negative corporate headlines before the open, which only added to the nervous sentiment ahead of the FOMC decision tomorrow. The S&P 500 tested its 50-day moving average (3,919) around midday where it found support from buyers. That support soon wavered and the S&P 500 traded below that level for most of the afternoon before a late session rally left the index just a hair above its 50-day moving average.
Walmart's (WMT 121.98, -10.04, -7.6%) warning ahead of the open was the through-line for the price action in the indices today. The company cut its earnings outlook and said increasing levels of food and fuel inflation negatively affected customers' discretionary spending capacity. That led to a buildup in inventories on things like apparel. Walmart's CEO said this shift in spending will force the company to cut prices on general merchandise.
This warning created a ripple effect for other retailers. Target (TGT 151.81, -5.86, -3.6%) and Ross Stores (ROST 77.96, -4.67, -5.7%), among others, traded down today in solidarity. Adding more context, the SPDR S&P Retail ETF (XRT) closed behind the broader market, down 4.2%.
Other corporate headlines included Shopify (SHOP 31.55, -5.16, -14.1%) announcing it is going to reduce its workforce by approximately 10% by the end of the day. This comes ahead of the company's earnings report tomorrow morning. McDonald's (MCD 257.09, +6.71, +2.7%) reported better-than-expected earnings before the open but noted that "the operating environment across the competitive landscape remains challenging." This sent some restaurant names lower in solidarity.
In addition, Alphabet (GOOG 105.44, -2.77, -2.7%) and Microsoft (MSFT 251.90, -6.93, -2.7%) traded lower in front of their earnings reports after the close on concerns that their guidance would not live up to high expectations.
All this corporate news combined with existing rate-hike concerns ahead of the FOMC decision tomorrow at 2:00 p.m. ET. The worry is that inflation will remain sticky, so the Fed will remain aggressive.
On a related note, some weaker than expected new home sales and consumer confidence data exacerbated existing growth concerns and worries about the Fed's rate hikes leading to a possible recession. The 2-yr note yield ended the day unchanged at 3.04% while the 10-yr note yield fell three basis points to 2.79%.
The advance-decline line further illustrated the buyer trepidation today. Decliners led advancers by a roughly 8-to-5 margin at both the NYSE and the Nasdaq.
Energy futures settled mixed. WTI crude oil futures fell 1.9% to $94.92/bbl. Natural gas futures rose 1.4% to $8.75/mmbtu. Unleaded gasoline futures fell 1.1% to $3.08/gal.
Earnings reports tomorrow morning are headlined by Automatic Data (ADP), Boeing (BA), Bristol-Myers (BMY), General Dynamics (GD), Hilton (HLT), Humana (HUM), Kraft-Heinz (KHC), Norfolk Southern (NSC), Rockwell Automation (ROK), Sherwin-Williams (SHW), Shopify (SHOP), Spotify (SPOT), T-Mobile US (TMUS), and Waste Management (WM).
Tomorrow, market participants will receive the following economic data:
- 7:00 ET: Weekly MBA Mortgage Index (prior -6.3%)
- 8:30 ET: June Durable Orders (consensus -0.5%; prior 0.7%), Durable Orders ex-transportation (consensus 0.3%; prior 0.7%), June advance Retail Inventories (prior 1.1%), June advance Wholesale Inventories (prior 2.0%), and June advance goods trade deficit (prior -$104.0 bln)
- 10:00 ET: June Pending Home Sales ( consensus -1.5%; prior 0.7%)
- 10:30 ET: Weekly crude oil inventories (prior -0.45 mln)
- 14:00 ET: July FOMC Rate Decision ( consensus 2.25-2.50%; prior 1.50-1.75%)
- Dow Jones Industrial Average: -12.6% YTD
- S&P 400: -15.7% YTD
- S&P 500: -17.7% YTD
- Russell 2000: -19.6% YTD
- Nasdaq Composite: -26.1% YTD