8/21/2019 12:30:00 PM Stocks march broadly higher in midday trading as investors welcome earnings news
(AP) — U.S. stocks marched broadly higher in midday trading Wednesday as investors welcomed a batch of strong earnings reports from several big retailers.
Target and Lowe’s surged, leading a rally in retail stocks, as the market bounced back from its first loss in four days. Technology companies accounted for a big share of the market’s gains. Microsoft gained 1.1% and Apple rose 1.4%.
Health care stocks also climbed. Merck rose 1.6%.
Financial stocks rose as bond prices fell, pushing yields higher. American Express picked up 1%. Real estate and utilities lagged the rest of the market.
The rally came ahead of the afternoon release of the minutes from the Federal Reserve’s latest interest rate policy meeting. Investors will be seeking insight into the Fed’s willingness to make further interest rate cuts to help shore up the economy. The Fed lowered interest rates by a quarter-point at its last meeting, the first cut in a decade.
The stock market has been volatile this month as investors try to parse conflicting signals on the U.S. economy and determine whether a recession is on the way. A key concern is that the U.S.-Chinese tariff war will weigh on global economic growth.
The Trump administration has imposed a 25% tariff on $250 billion in Chinese imports. A pending 10% tariff on another $300 billion in goods would hit everything from toys to clothing and shoes that China ships to the United States, however some 60% of the new tariffs wouldn’t go into effect until mid-December, and others were taken off the table altogether.
The potential impact those tariffs could have on U.S. consumers could hurt sales for Target and other big retailers. Home Depot on Tuesday cut its sales expectations for the year in part because of the potential tariff impact.
Even after the bouts of turbulent trading this month, the S&P 500 is still having a good year. The broad market index is up 16.7% for 2019. Similarly, the Nasdaq is still up 21% for the year.
KEEPING SCORE: The S&P 500 was up 0.9% as of 12:04 p.m. Eastern Time. The Dow Jones Industrial Average gained 285 points, or 1.1%, to 26,245. The Nasdaq added 1%.
Major indexes in Europe also headed broadly higher.
ANALYST’S TAKE: “We had a couple of great earnings reports this morning, especially Target, which is a good barometer of the consumer,” said Dan Heckman, national investment consultant at U.S. Bank Wealth Management. “The consumer still appears to be spending and doing well.”
While the encouraging earnings put investors in a buying mood, Heckman noted that August and September are historically some of the weakest months of the year for stocks, so investors should expect more market volatility, particularly if the U.S. and China don’t strike a trade deal.
ON TARGET: After mixed results from retailers on Tuesday, Target soared 19.8% after easily beating profit forecasts for its second quarter as it pushes faster delivery and invests heavily in new private label brands.