Investing.com -- The Dow closed lower Tuesday under pressure from regional banks and a tumble in retailers following disappointing quarterly results from Macy’s and Dick’s Sporting Goods.
The Dow Jones Industrial Average fell 0.5%, 175 points, Nasdaq was flat, and the S&P 500 fell 0.3%.
Retail stocks fell more than 2%, pressured by a tumble in Macy’s and Dick’s Sporting Goods as the duo’s outlook rattled investor sentiment.
Macy’s Inc (NYSE:M) fell more than 14% after the department store said it was taking a “cautious approach on the consumer,” following a faster-than-expected rise in customer credit-card delinquencies. The somber outlook offset quarterly results that beat on both the top and bottom lines.
Dick’s Sporting Goods Inc (NYSE:DKS), meanwhile, cut its guidance on the full-year profit after reporting weaker-than-expected quarterly results as inventory shrinkage, a loss in inventory not due to sales, weighed on margins. Its shares fell more than 24%.
“The larger disappointment was in gross margins at 34.4% vs. consensus 36.3%, with the company noting the shortfall was due in large part to elevated inventory shrink,” Wedbush said in a note.
Lowe’s Companies Inc (NYSE:LOW), however, bucked the trend to rise almost 4% after it maintained its annual guidance and reported better-than-expected quarterly results.
Regional banks including Regions Financial Corporation (NYSE:RF), KeyCorp (NYSE:KEY), and Zions Bancorporation (NASDAQ:ZION) fell sharply after credit ratings agency S&P Global downgraded its credit ratings on several regional banks, souring investor sentiment on the sector.
The dent in creditworthiness will make it more expensive for banks to borrow money at a time when strengthening their balance sheets is important in the post-banking crisis seen early this spring.
Charles Schwab Corp (NYSE:SCHW) was also in the firing line, falling more than 4% after the brokerage firm said it planned to cuts jobs targeting $500 million cost savings.
Tech stocks slipped as Treasury yields remain elevated, with the United States 2-Year treasury yield, which is more sensitive to Fed rate hikes, topping 5% to hit its highest level since early July.
Microsoft (NASDAQ:MSFT) closed just above the flat zone, however, as optimism builds that it can get its $42 billion acquisition of Activision over the line after it submitted a new merger agreement to the UK competition regulator.
Under the revised terms, Microsoft said it would grant exclusive rights to games rival Ubisoft to distribute Activision Blizzard (NASDAQ:ATVI) titles on PC and console outside of the European Economic Area, potentially easing the UK regulator's antitrust concerns.
The move lower in tech comes just a day ahead of Nvidia’s quarterly results that many see as a barometer of AI demand and another catalyst for tech should the chipmaker impress.
"The guidance from Nvidia (NASDAQ:NVDA) might be that they can't produce chips enough fast enough," Jimmy Lee, the founder and CEO of The Wealth Consulting Group told Investing.com's Yasin Ebrahim in an interview on Tuesday.
"That might be a concern, but my expectation is that NVIDIA could come out with a good report, and that could help other tech-related stocks to rally with Nvidia," Lee added.
Begin trading today! Create an account by completing our form
At One Financial Markets we are committed to safeguarding your privacy.
Please see our Privacy Policy for details about what information is collected from you and why it is collected. We do not sell your information or use it other than as described in the Policy.
Please note that it is in our legitimate business interest to send you certain marketing emails from time to time. However, if you would prefer not to receive these you can opt-out by ticking the box below.
Alternatively, you can use the unsubscribe link at the bottom of the Demo account confirmation email or any subsequent emails we send.
By completing the form and downloading the platform you agree with the use of your personal information as detailed in the Policy.