While you were sleeping: Eyes on Fed, retailers rally

Thursday 20th November 2014

Wall Street slipped, pushing the Dow and the S&P 500 down from their record-high closes the previous day, as investors awaited guidance on the timing of an interest rate increase by the US Federal Reserve.

The Fed is set to release minutes from its October meeting at 2 pm in Washington

“Investors will screen the minutes for any fresh hints about the fights between the doves and the hawks at the Fed and the pace of the future rate path,” Ralf Zimmermann, an equity strategist at Bankhaus Lampe in Dusseldorf, Germany, told Bloomberg News.

In afternoon trading in New York, the Dow Jones Industrial Average slipped 0.08 percent, the Standard & Poor’s 500 Index fell 0.27 percent, while the Nasdaq Composite Index declined 0.48 percent. All three benchmarks pared earlier losses.

US Treasuries also fell ahead of the minutes. Yields on the five-year note rose five basis points to 1.65 percent in midday trading in New York.

Declines in shares of Verizon Communications and those of Microsoft, down 1.4 percent and 1.2 percent respectively, outweighed gains in shares of Home Depot and those of Boeing, each up 1.1 percent.

Shares of some US retailers jumped amid better-than-expected earnings. Shares of Staples soared 9.1 percent, while those of Target climbed 7.2 percent.

“Once we get through Thanksgiving (later this month) the focus will be on the consumer and retail sales,” KC Mathews, the Kansas City-based chief investment officer at UMB Bank, told Bloomberg News. “If you have a good holiday spending season it validates the health of the consumer and sets us up for some momentum in 2015.”

Shares of Lowe’s rallied 6.6 percent after the home improvement chain upgraded its earnings forecasts.

"We are pleased with our performance, and continue to be cautiously optimistic about the home improvement landscape,” Robert Niblock, Lowe's CEO, said in a statement.

The latest housing data underpinned that optimism.

Starts for US single-family homes advanced 4.2 percent to a 696,000 annualised rate in October, the most since November 2013, Commerce Department data showed. Meanwhile, building permits climbed 4.8 percent to a 1.08 million-unit rate, the highest in more than six years.

"Housing activity continues to recover, although the pace of the recovery remains slower than in the previous couple of years, owing to the decline in housing affordability," Blerina Uruci, an economist at Barclays in New York, told Reuters.

In Europe, the Stoxx 600 edged lower to end the session at 339.15.

The UK’s FTSE 100 Index slipped 0.2 percent. France’s CAC 40 added 0.1 percent, while Germany’s DAX gained 0.2 percent.

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