US stocks finished higher on Thursday to see their fifth consecutive day of gains after see-sawing for much of the afternoon due to Fed chair Jerome Powell bringing up concerns about the size of US debt in an afternoon appearance.
Speaking at the Economic Club of Washington DC, Powell suggested that tempered inflation will allow the US central bank to be both flexible and patient in raising interest rates this year. “We are in a place where we can be patient and flexible and see what does evolve,” Powell said, according to published reports.
But the indices turned negative for a brief spell after Powell raised concerns about the levels of US debt and said his principal worry is global growth, with the slowing of China’s economy posing particular concern.
By the close, the Dow Jones Industrial Average had bounced back, however, and ended the day up 122.8 points to hit 24,001 while the tech-laden Nasdaq climbed 0.42% to finish at 6,986.
The S&P 500 also rose 0.45% to 2,596 thanks to the strength of industrial and real estate companies.
Airline stocks were high on the list of companies taking a battering, with American Airlines Group (NASDAQ:AAL) shedding 4.1% to $32.04 after paring back its revenue forecast for the fourth quarter. JetBlue Airways (NASDAQ:JBLU) and Southwest Airlines (NYSE:LUV) also ended the day lower.
Macy’s Inc (NYSE:M) plunged too, shedding 17.66% to hit $26.11 by the close of trade after the department store trimmed its profit and sales forecast for fiscal 2018 and reported weak Christmas sales. Its fall created knock-on effects in the wider retail sector, with stores such as Target (NYSE:TGT) shedding 2.8% to finish at $68.29 and Nordstrom Inc (NYSE:JWN) closing down 4% at $47.30.
By the closing bell, the Russell 2000 index of small-cap stocks nudged higher to add 6 points and finish at 1,445 while in Canada, Toronto’s TSX rose nearly 99 points to reach 14,903.
2:30 PM: US stocks fluctuate as Macy’s weakness in December casts pall on retail industry
Stocks swung between gains and losses after Macy's Inc (NYSE:M) cast a pall over the retail industry when it reported weakness during December.
The retailer tumbled 18% to $25.90 after announcing that the holiday season started strong but weakened in mid-December and didn’t return to expected patterns until the week of Christmas.
The S&P 500 Index edged up 0.2% to 2,588.75 after declining earlier. The Dow Jones Industrial Average rose 0.2% to 23,934.03.
The Nasdaq was slightly higher, rising 0.3% to 6,977.20 after dipping. The Russell 2000 index of small-cap stocks was little changed.
In Canada, the S&P/TSX Composite Index advanced 0.2% to 14,840.05.
11:00 am: US stocks fall as Wall Street weighs corporate earnings; Department stores weigh as Macy's tanks 18%
US stocks opened lower Thursday, falling for the first time in five trading sessions as investors looked past progress in US-China trade talks and shifted their focus to corporate earnings.
The winning run for equities was halted over concerns about the prospect of weakening profit guidance for the coming year.
Department store retailers were getting particularly badly hit Thursday as holiday sales figures disappoint, which weighed on the sector.
Macy's Inc (NYSE:M) was the biggest laggard, losing over 18% on the day at $25.96 as it posted just a 1.1% gain in same-store sales and online sales during the festive season between November and December. Macy's also downgraded its profits outlook.
Kohl's Corp (NYSE:KSS) shares fell neatly 7% as it also reported a slowdown in holiday-period sales. Target Corp (NYSE:TGT) shed 3.83% to $67.62, while Nordstrom Inc (NYSE:JWN) shares shed 4.26% to $47.20.
Meanwhile, the S&P 500 opened lower by 0.78% to 2,565.72, heavily weighed down by Macy’s which cratered 18% on weak holiday sales results, and slashed outlook.
Elsewhere, the Russell 2000 index of small-cap stocks fell 0.89% to 1,425.96.
7:17 am: US stocks seen coming off highs as Chinese data and global trade worry markets
US stocks are seen starting in the red Wednesday, coming off the recent winning run, and as European benchmarks lag.
It comes as fears were stoked again about a slowdown in the Chinese economy after the latest data showed that prices in the People's Republic had risen by much less than expected last month (December).
The consumer price index dropped to 1.9%, well below the 3% upper limit set by the Chinese central bank.
In Europe, Brexit worries persist as the March 29 leave deadline for the UK looms nearer, as does a vote next week in Parliament on the UK's Prime Minister's withdrawal bill.
FTSE 100 is down over six points at 6,900 at the time of writing, while the German DAX is down around 25 points at 10,868.
On Wall Street yesterday, stocks climbed Wednesday for a fourth straight day after minutes of the Federal Reserve’s December meeting indicated plans to take a cautious approach to future interest rate hikes.
The Dow Jones Industrial Average closed up over 91 points at 23,897, while the tech-heavy Nasdaq finished around 60 points higher at 6,957. The S&P 500 index finished over 10 points higher at 2,584.
In Toronto, the TSX closed nearly 200 points to the good, at 14,804.
In futures today, the Dow Jones is down 101 points; the S&P 500 is off 14, while the Nasdaq futures are down over 40 points.
Dean Popplewell, analyst at Forex group Oanda, said: "Global equities took a time-out overnight, ending a four-day rally as investor optimism over a possible easing in Sino-U.S trade tensions faded and concerns around global economic growth returned.
"Capital markets were probably too optimistic that some concessions would be announced at the end of three-day trade talks this week between the world’s two largest economies – investors seem to prefer to wait for concrete details in the negotiations before mapping out the next leg of investments."