U.S. stocks fell Wednesday as traders awaited the Federal Reserve’s release of its policy meeting from earlier this month.
The Dow Jones Industrial Average fell 125 points, or 0.4%. The S&P 500 fell for a second day and was down 0.3%. The Nasdaq Composite lost 4%, after posting a steep loss in the previous session.
Dick’s Sporting Goods shares tumbled more than 8%, despite topping earnings and revenue estimates for its fiscal first quarter, after the retailer cut its outlook for the year amid rising inflation and ongoing supply chain challenges. Retailers have been on an earnings spree since last week that has held the attention of investors anxious to see how companies are managing sky-high inflation.
Best Buy slid more than 3% after Barclays downgraded the shares, following a mixed earnings report Tuesday in which the electronics retailer cut its yearly outlook.
Investors and analysts have pointed out that the ongoing retail wreck reflects a shift in consumers demand for services rather than goods, and some have suggested stocks may be getting overly punished for their results.
“I know everybody’s focused on Walmart and Target,” which spooked investors when they plummeted on weak results last week, “but let’s focus on something like TJX that actually delivered and raised their margin guidance,” Hightower Capital CIO Stephanie Link said Wednesday on CNBC’s “Squawk Box.”
She noted that that Ralph Lauren beat on the top and bottom lines and Nordstrom’s designer and shoe business helped comps because people wanted to buy things for occasions. Nordstrom shares added more than 4% Wednesday morning after the retailer surpassed sales expectations and raised its full-year outlook.
“Services and high end are actually still doing pretty good,” Link said.
Homebuilder Toll Brothers also posted quarterly results that beat analyst expectations, sending the stock up more than 3% in the premarket.
Wednesday’s moves came after a downbeat session for the Nasdaq, which tumbled following a warning of slowing growth from social media company Snap, which dinged other social media and tech stocks, including Meta Platforms, Twitter and Alphabet.
Traders will continue to parse through earnings reports this week to see how companies are handling inflationary pressures. Snowflake and Nvidia are set to post quarterly reports after the bell.
On the economic front, investors are awaiting the latest meeting minutes from the Federal Open Market Committee. At the May 4 meeting, the Fed hiked rates by half a percentage point, with Chair Jerome Powell saying that inflation is “much too high and we understand the hardship it is causing. We’re moving expeditiously to bring it back down.”