Disappointing Home Depot Sales May Weigh on Wall Street

May 15, 2018
wall street

By Investors Hub

The major U.S. index futures are pointing to a higher opening on Tuesday, with stocks likely to give back ground after trending higher in recent sessions.

The downward momentum on Wall Street comes as traders react to earnings news from home improvement retailer Home Depot (HD).

Shares of Home Depot are moving notably lower in pre-market trading after the company reported first quarter earnings that beat analyst estimates but weaker than expected sales. Despite this, when comparing Home Depot vs. Lowes, Home Depot continues to showcase positive strengths.

After failing to sustain an early move to the upside, stocks gave back ground over the course of the trading session on Monday. The major averages pulled back well off their best levels of the day but managed to close in positive territory.

The major averages ended the day modestly higher. The Dow rose 68.24 points or 0.3 percent to 24,889.41, the Nasdaq inched up 8.43 points or 0.1 percent at 7,411.32 and the S&P 500 crept up 2.41 points or 0.1 percent to 2,730.13.

The early strength on Wall Street came amid easing trade tensions ahead of a second round of trade talks between the U.S. and China this week.

Ahead of the meeting, President Donald Trump indicated in a post on Twitter that he is working with Chinese President Xi Jinping to get Chinese telecom giant ZTE Corp. “back into business, fast.”

“President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast,” Trump tweeted. “Too many jobs in China lost. Commerce Department has been instructed to get it done!”

ZTE has been crippled by a ban on U.S. supplies to its business, and sources briefed on the matter told Reuters that China has demanded the issue be resolved as a prerequisite for broader trade negotiations.

In a subsequent tweet, Trump expressed optimism about trade talks with China despite claiming past negotiations have been one-sided in favor of Beijing.

“China and the United States are working well together on trade, but past negotiations have been so one sided in favor of China, for so many years, that it is hard for them to make a deal that benefits both countries,” Trump tweeted. “But be cool, it will all work out!”

Buying interest waned over the course of the session, however, with some traders reluctant to continue buying stocks amid a lack of major U.S. economic data.

Reports on retail sales, homebuilder confidence, housing starts, and industrial production are likely to attract attention in the coming days.

Natural gas stocks saw considerable strength on the day, with the NYSE Arca Natural Gas Index climbing by 1.7 percent. With the gain, the index reached its best closing level in over three months.

The advance by natural gas stocks came amid an increase by the price of the commodity, as natural gas rose $0.036 to $2.842 per million BTUs.

Significant strength was also visible among semiconductor stocks, as reflected by the 1.3 percent gain posted by the Philadelphia Semiconductor Index.

NXP Semiconductors (NXPI) posted a standout gain after a report from Bloomberg said Chinese regulators have restarted their review of Qualcomm’s (QCOM) application to acquire the chipmaker.

Biotechnology, telecom, and oil stocks also saw notable strength on the day, while real estate stocks moved to the downside.

Dipo Olowookere

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

Mr Olowookere can be reached via [email protected]

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