Dow Futures Down 175 Pts; Target Earnings Disappoint

By Peter Nurse 

Investing.com -- U.S. stocks are seen opening lower Wednesday, handing back some recent gains, with a disappointing quarterly report from retail giant Target ahead of the release of July retail sales data.

At 07:00 ET (11:00 GMT), the Dow Futures contract was down 175 points, or 0.5%, S&P 500 Futures traded 30 points, or 0.7%, lower and Nasdaq 100 Futures dropped 105 points, or 0.8%.

The three main Wall Street indices closed largely higher Tuesday, boosted by solid earnings from Walmart (NYSE:WMT) and Home Depot (NYSE:HD), which helped lift investor sentiment about the American consumer.

The blue-chip Dow Jones Industrial Average led the way, gaining over 200 points, or 0.7%, and registering a five-day win streak.

The retail sector remains in the spotlight Wednesday.

Target (NYSE:TGT) reported a near 90% drop in quarterly profit from a year ago, as the big-box retailer missed already twice lowered expectations, with steep markdowns on unwanted merchandise weighing heavily.

Lowe’s (NYSE:LOW) reported mixed second quarter results, with earnings beating expectations, helped by an increase in sales to professionals, while revenue fell short, hurt by the shortened spring and lower demand for certain discretionary items.

Staying in the corporate sector, Tencent (OTC:TCEHY) logged its first-ever decline in quarterly revenue, with the social media and gaming behemoth becoming the latest victim of a worsening Chinese economy.

The July U.S. retail sales release is also due at 08:30 ET (12:30 GMT) and is expected to show monthly gains of just 0.1% compared with the 1% jump in June as soaring prices begin to weigh on consumer’s discretionary spending.

Also of interest will be the minutes of the last Federal Reserve meeting, at 14:00 ET (18:00 GMT), with traders looking to see whether the central bank signals another interest rate hike of 75 basis points in September, matching the July increase.

Oil prices stabilized Wednesday, handing back earlier gains after a bigger-than-expected drop in U.S. crude inventories reduced concerns over waning demand at the world’s largest consumer.

Crude stocks fell by about 448,000 barrels for the week ended Aug. 12, according to data from the industry body American Petroleum Institute, while gasoline inventories fell by about 4.5 million barrels.

Investors now await the official data from the Energy Information Administration, due later in the session, for confirmation.

Global oil markets face a high risk of a supply squeeze this year, the new OPEC Secretary-General Haitham al-Ghais said, as fears over slowing consumption in China and the wider world have been exaggerated and spare production capacity dwindles.

By 07:00 ET, U.S. crude futures traded 0.1% higher at $86.61 a barrel, while the Brent contract fell 0.1% to $92.21.

Additionally, gold futures traded 0.2% lower at $1,786.20/oz, while EUR/USD traded 0.1% higher at 1.0175.