MARKET SNAPSHOT: Dow Rises 200 Points Amid Good Earnings From Target And Lowe's

By Mark DeCambre and Chris Matthews, MarketWatch

Retailers' quarterly results offer more evidence of consumer strength

Stocks gained at the start of trade Wednesday after upbeat quarterly results from some of the nation's biggest retailers, Target and Lowe's.

Investors were also awaiting the release of minutes from the Federal Reserve's July 30-31 policy gathering, which could offer insights on the central bank's decision last month to cut interest rates for the first time in more than a decade and provide clues on its future path.

How are the major benchmarks faring?

The Dow Jones Industrial Average rose 218 points, or 0.9%, to 26,178, the S&P 500 index climbed 23 points, or 0.8%, to 2,924, while the Nasdaq Composite index climbed 64 points, or 0.8%, to 8,012.

On Tuesday (http://www.marketwatch.com/story/us-stock-futures-edge-lower-threaten-to-snap-dows-three-day-win-streak-2019-08-20), the The Dow declined 173.35 points, or 0.7%, at 25,962.44, the S&P 500 index lost 23.14 points, or 0.8% to 2,900.51, while the Nasdaq Composite Index gave up 54.25 points, or 0.7%, to 7,948.56.

Read:Stock-market investors rattled by bond market's 'warning shot'--here's what's next (http://www.marketwatch.com/story/stock-market-investors-rattled-by-bond-markets-recession-warning-heres-whats-next-2019-08-17)

What's driving the market?

Results from retail giants buoyed investor sentiment Wednesday, after Target Corp.'s shares (TGT) appeared set to hit a record high (http://www.marketwatch.com/story/targets-stock-surges-toward-record-high-after-profit-and-sales-beats-raised-guidance-2019-08-21) following the discount retailer's report of fiscal second-quarter earnings and sales that beat expectations. Similarly home-improvement retailer (http://www.marketwatch.com/story/lowes-tops-forecast-with-rise-in-second-quarter-profit-2019-08-21)Lowe's Cos. (LOW) said its second-quarter net income rose to $1.68 billion, or $2.14 a share, from $1.52 billion, or $1.86 a share, with sales up 0.5% to $20.99 billion.

The results from the likes of Target and Lowe's and Home Depot Inc. (HD) on Tuesday, helped to quell, for the moment, worries that the domestic economy, buffeted by a China-U.S. trade policy clash, is set to soon enter recession.

A key focus for investors on the session, however, will be on the Fed minutes set to be released at 2 p.m. Eastern Time Wednesday.

The minutes and a Fed symposium in Jackson Hole, Wyo., set to kick off on Thursday, may provide more clarity to a market that appears convinced that the central bank's rate-setting committee is inclined to cut rates further this year and as early as next month. Wall Street is pricing in a near-certain rate cut on Sept. 18 when the Federal Open Market Committee's policy gathering concludes based on federal funds futures from the CME Group (https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html).

Investors will be watching to determine how other FOMC committee members voted and the thinking behind the two dissenting voters at the last gathering.

"Today's update will give us an insight into the central bank's rationale for the rate cut last month. Things have changed since the July Fed meeting, so the update might not provide that much insight," wrote David Madden market analyst at CMC Markets UK, in a Wednesday note.

The FOMC minutes will be a particular focus after President Donald Trump renewed his criticism of the Fed on Tuesday, saying, "If the Fed would do its job, we'd have a tremendous spurt of growth," he said in remarks alongside the president of Romania at the White House on Tuesday afternoon (http://www.marketwatch.com/story/trump-says-white-house-looking-at-payroll-tax-cut-urges-fed-rate-cut-2019-08-20). On Monday, Trump said the central bank should consider deeper cuts to key interest rates, of around one percentage point which he reiterated on Tuesday.

The president also said Tuesday that he was looking at tax cuts, including cutting payroll taxes, which follows a late-Monday Washington Post report that the administration was considering a temporary payroll tax cut. The White House had previously said (http://www.marketwatch.com/story/trump-says-white-house-considering-tax-cuts-as-he-rejects-recession-worries-2019-08-20) cutting payroll taxes wasn't under consideration, and Trump on Tuesday didn't put any time frame on such a cut. "Payroll taxes is something I have been thinking about. Many people would like to see that," he said.

Abroad, investors were focused on political developments in Italy after the emergence of a potential center-left coalition government appeared to lower the chances (https://www.politico.eu/article/italy-election-salvini-center-left-greenlights-potential-coalition-with-5stars/) of a snap election following the resignation of Prime Minister Giuseppe Conte Tuesday. Bond yields in the region, which move inversely to prices, lower. The yield on 10-year Italian government debt fell 4 basis points to 1.318%

Which stocks are in focus?

Shares of Target (TGT) rose 16.9% Wednesday after issuing quarterly results.

Lowe's Cos's(LOW) stock surged 12.5% in early trade.

Shares of Analog Devices Inc. (ADI) fell 1.2%, after the semiconductor firm reported a fiscal third-quarter profit and revenue that beat expectations, but provided a mixed fourth-quarter outlook.

How are other markets trading?

The yield on the 10-year U.S. Treasury note rose 3 basis points to 1.584%.

Stocks in Asia traded mixed overnight, as China's CSI 300 fell 0.2%, Hong Kong's Hang Seng Index gained 0.2% and Japan's Nikkei 225 shed 0.3%.

In Europe, stocks traded higher, with the Stoxx Europe 600 climbing by about 1.3%. Italy's FTSE MIB Index was up 2% on Wednesday, while the exchange-traded iShares MSCI Italy (EWI) is up 0.7% so far this week.

In commodities markets, the price of crude oil (http://www.marketwatch.com/story/oil-price-rally-takes-a-breather-after-mondays-big-gains-2019-08-20) was rising 0.9% to $56.67 a barrel, while gold prices traded 0.3% lower (http://www.marketwatch.com/story/gold-prices-edge-higher-as-bond-yields-slide-2019-08-20). The U.S. dollar , meanwhile, was flat relative to its major trading partners.

(END) Dow Jones Newswires

August 21, 2019 09:46 ET (13:46 GMT)

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