It was a wobbly end to a tough month for stocks.
All three major benchmarks finished February in the red as strong readings on both the U.S. economy and inflation have heightened fears that the Fed could continue raising interest rates and keep them higher for longer. Today’s economic data, as well as cautious guidance from Target (TGT (opens in new tab)), sparked even more uncertainty for investors, and had stocks struggling for direction into the close.
Among the many economic reports that were released today was the S&P CoreLogic Case-Shiller National Home Price Index, which showed that home prices fell 0.5% in December, their sixth straight monthly decline.
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Separately, the Conference Board said its consumer confidence index fell more than expected in February. “Fewer consumers are planning to purchase homes or autos and they also appear to be scaling back plans to buy major appliances. Vacation intentions also declined in February,” the Conference Board said in its press release (opens in new tab).
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“Consumers’ confidence continued to wane in February,” says Shannon Seery, economist at Wells Fargo. “A tight labor market is keeping consumers feeling secure about their present situation, but still high prices and rising borrowing costs leave consumers particularly concerned about what lies ahead.”
And this shift in dynamic from the consumer is being seen in the retail earnings that have been rolling in recently. Earlier today, Target (+1.0%) reported higher-than-expected earnings and revenue, but CEO Brian Cornell told CNBC’s “Squawk Box (opens in new tab)” that sales of food, beverage and household essentials offset softness in some discretionary categories. And like so many other retailers this earnings season, Target gave cautious guidance amid “a very challenging environment,” Cornell said in the company’s quarterly statement (opens in new tab).
The “lowered bar” for Target’s guidance “should help investors become more comfortable with the story, given that sales continue to remain strong,” says David Wagner, portfolio manager at Aptus Capital Advisors (opens in new tab), a registered investment advisor with $3.9 billion in assets under management.
Consumers will stay in focus over the next several days, with a number of other retailers on this week’s earnings calendar. Next up is dollar-store chain Dollar Tree (DLTR (opens in new tab)), which reports tomorrow morning.
As for the major market indexes, the Nasdaq Composite closed down 0.1% at 11,455, the S&P 500 slipped 0.3% to 3,970, and the Dow Jones Industrial Average fell 0.7% to 32,656.
The best ETFs to buy”As waves of uncertainty crash into March, the volatility playing out on the stock market is expected to continue at least until central banks press pause on rates, a scenario which is being pushed, bit by bit further ahead into the year,” says Susannah Streeter, head of money and markets at Hargreaves Lansdown.
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