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Market Snapshot: Stocks struggle for direction after weaker-than-expected housing data

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Major U.S. stock benchmarks struggled for direction earlyTuesday, with support tied to a strong round of earnings from major retailers, including Dow components Home Depot Inc. and Walmart Inc., offset by weaker-than-expected housing data.

How are stock benchmarks performing?
  • The Dow Jones Industrial Average
    DJIA,
    -0.23%

    rose 24.05 points, or 0.1%, to 34,351.84.
  • The S&P 500
    SPX,
    -0.06%

    edged up 3.20 points, or 0.1%, at 4,166.49.
  • The Nasdaq Composite
    COMP,
    +0.52%

    was up 47.83 points, or 0.4%, at 13,426.87.

On Monday, the Dow shed 54.34 points to end at 34,327.79, a decline of 0.2%, the S&P 500 fell 10.56 points, or 0.3%, closing at 4,163.29, and the Nasdaq Composite slumped 50.93 points to finish at 13,379.05, a retreat of 0.4%.

What’s driving that market?

Stock-market investors were trying to throw off a malaise that started the week, with investors poring over a batch of early quarterly results, as concerns about lofty valuations and rampant, post-COVID inflation run in the background.

Home Depot
HD,
-0.84%

results provided an early boost to the mood on Wall Street after the home-improvement retailer reported fiscal first-quarter profit and sales that were well above expectations, citing “unprecedented demand” for home projects. Shares were off 0.2%.

Other heavyweight retailers, including Walmart Inc.
WMT,
+2.67%

and Macy’s Inc.
M,
+2.04%

also delivered strong results Tuesday morning.

Retailers are bringing up the rear of earnings season, with equity markets largely stuck in a range since mid-April thanks to a tug of war between optimism over a post-pandemic economic recovery and rising worries over inflation.

“Following the extraordinary rally since the March 2020 bottom and particularly since November, a period of consolidation for the market is not unexpected or unhealthy,” said Mark Hackett, chief of investment research at Nationwide, in emailed comments. “Markets are likely to continue in a saw-tooth pattern until we grow into our valuation.”

Attention was also building around President Joe Biden’s $2.3 trillion infrastructure proposal, with Treasury Secretary Janet Yellen slated to deliver a speech at the U.S. Chamber of Commerce in support of the proposal.

Meanwhile, Bloomberg News reports that Republicans, led by West Virginia Sen. Shelley Moore Capito, were set to deliver their own infrastructure plan.

In deal news, Amazon.com Inc.
AMZN,
+0.94%

was reportedly in discussions to buy MGM Holdings Inc., the studio behind the James Bond franchise, according to a report Monday by the Information, citing a person familiar with the situation.

The report comes after AT&T IncT and Discovery IncDISCA on Monday agreed on a $43 billion deal to combine their media holdings in a new company.

Data showed U.S. home builders started construction on homes at a seasonally adjusted annual rate of 1.57 million in April, representing a 9.5% decrease from the previous month’s lowered figure, the U.S. Census Bureau reported Tuesday. Compared with April 2020 though, housing starts were up 67%, though the year-over-year comparison is skewed by the effects of the COVID-19 pandemic’s onset a year ago.

The pace of permitting for new housing units increased again in March. Permitting for new homes occurred at a seasonally-adjusted annual rate of 1.76 million, up 0.3% from March and 61% from a year ago.

Investors may be looking for policy news, as Lawrence Summers, former secretary of the Treasury under Bill Clinton and director of the National Economic Council under Barack Obama, is set to speak at 10:05 a.m. Eastern at the second day at a conference hosted by the Atlanta Federal Reserve. Summers has criticized stimulus efforts as too aggressive.

Later in the morning, Dallas Fed Robert Kaplan and Atlanta Fed President Bostic will speak at the same conference at 11:05 a.m.

Which companies are in focus?
  • Shares of Walmart were up 3.9% after delivering earnings and revenue that topped forecasts and raised its full-year guidance.
  • Macy’s Inc. shares fell 2.1% after delivering a surprise earnings beat and lifting guidance.
  • Flywire Corp. FLYW, set terms of its initial public offering, in which the Boston-based payments enablement and software company is looking to raise up to $208.8 million.
  • BioNTech SE BNTX, the German biotech that joined with Pfizer Inc. PFE, to develop a COVID-19 vaccine that is authorized for use in the U.S., said Tuesday it has named Jens Holstein to be chief financial officer.
What are other markets doing?
  • The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    1.650%

    was flat at 1.64%.
  • The ICE U.S. Dollar Index
    DXY,
    -0.34%
    ,
    a measure of the U.S. currency against a basket of six major rivals, was down 0.4% to trade at its lowest level since late February.
  • Oil futures were mixed, with the U.S. benchmark
    CL00,
    -0.60%

    dipping lower after the global benchmark, Brent crude
    BRN00,
    -0.40%
    ,
    briefly trading above $70 a barrel for the first time since mid-March.
  • The Stoxx Europe 600 index
    SXXP,
    +0.11%

    and London’s FTSE 100
    UKX,
    +0.12%

    each rose 0.2%.
  • Hong Kong’s Hang Seng Index
    HSI,
    +1.42%

    rose 1.4%, while Japan’s Nikkei 225
    NIK,
    +2.09%

    jumped 2.1% and the Shanghai Composite
    COMP,
    +0.52%

    edged up 0.3%.

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