Retailers reported lower-than-estimated earnings
US stocks fell for the first time in three days on Tuesday, 20 May 2014 after retailers reported lower-than-estimated earnings and small-cap shares slumped. Stocks slumped after surrendering their gains from Monday. Treasuries advanced, the yen approached a three-month high. Equity indices began the day with modest losses amid general weakness in most cyclical sectors.
While going into close, the Dow Jones Industrial Average shed 137.55 points, or 0.8%, to 16,374.31. The Nasdaq Composite ended the day down 28.92 points, or 0.7%, at 4,096.89. The S&P 500 closed 12.25 points, or 0.7%, lower at 1,872.83.
Nine out of ten sectors ended in the red led by consumer discretionary, financials and industrials sectors.
Retail stocks swooned after a handful of disappointing earnings. Shares of Staples lost 13% after the office-supplies seller reported adjusted first-quarter profit of 18 cents a share came in below expectations of 21 cents a share. The home-improvement chain Home Depot's shares defied the trend, rising 1.9%. The company's quarterly results missed expectations. But the company raised its full-year outlook.
General Motors shares slumped 3.5% after reports that the automaker is recalling another 2.4 million vehicles for various problems. The latest move brings GM's recalls for this year to 29. Caterpillar shares dropped 3.6%, weighing on the Dow Jones Industrial Average, after reporting a sharp drop in global retail machinery sales for the three months through April.
It was a very light day for U.S. economic data on Tuesday. Traders are awaiting Wednesday afternoon's release of the minutes from the latest Federal Reserve Open Market Committee (FOMC) meeting. That report is arguably the most important world data point of the week.
The feature in overnight trading was increasing worries about the European Union countries that have the most serious debt problemsnamely Italy and Spain. Italian bond yields rose to a five-week high overnight, while Spanish, Portuguese and Irish bond yields also rose.
Asian stock markets were mostly firmer on Tuesday, with no major news coming out of the region.
Bullion metals ended moderately higher on Tuesday, 21 May 2014. Gold futures settled modestly higher for a second straight session on Tuesday, sticking to a tight trading range and finding little reason to rally after the World Gold Council reported that first-quarter gold demand was nearly unchanged from a year ago. Traders also positioned themselves ahead of several speeches from Federal Reserve officials this week and the central bank's minutes from the last meeting due out Wednesday.
Gold for June delivery rose 80 cents, or 0.1%, to settle at $1,294.60 an ounce on the Comex division of the New York Mercantile Exchange. July silver tacked on nearly 5 cents, or 0.2%, at $19.40 an ounce.
Crude Oil futures edged a bit lower on Tuesday, 20 May 2014, with the June contract expiration on Nymex contributing to volatility as traders awaited weekly data on U.S. petroleum supplies. Traders also continued to weigh tensions in Ukraine and appeared willing to shrug off internal strife in Libya.
Crude oil for June delivery was off 27 cents, or 0.3%, at $102.34 a barrel on the New York Mercantile Exchange. July crude, which will become the front-month contract at the Nymex close, fell 18 cents, or 0.2%, to $101.93.
Today's participation marked an improvement from yesterday, but remained below average with less than 650 million shares changing hands at the NYSE.
Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET, while the minutes from the latest FOMC policy meeting will be released at 14:00 ET.
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