Lowe's Reports Q2 Earnings Beat

Target Lowe's earnings push Wall Street higher

Target Lowe's earnings push Wall Street higher

For the first two fiscal quarters of this year, earnings at off-mall retailers rose 3%, compared with a drop of 29% for mall-based retailers, according to Retail Metrics, a retail research firm, which analyzed results at 105 retailers. A 10% tariff on an additional $300 billion worth of Chinese goods is pending, and if it's enacted, US tariffs would hit basically everything China ships to the United States.

Analysts also say that the shift to online shopping keeps accelerating, giving a big advantage to such retailers as Target and Walmart that have invested billions of dollars in online deliveries and in their stores. Traders are now looking ahead to Friday, when Fed Chairman Jerome Powell is scheduled to speak at the central bank's annual conference.

Home Depot, Lowe's biggest competitor, said its sales growth slumped in the second quarter as lumber prices continued to fall. A pending 10% tariff on another $300 billion in goods would hit everything from toys to clothing and shoes that China ships to the United States, however some 60% of the new tariffs wouldn't go into effect until mid-December, and others were taken off the table altogether. In the latest quarter, Lowe's said same-store sales in the USA rose 3.2%, ahead of Home Depot, which reported US same-store sales growth of 3.1%.

The home improvement retailer reported its results the day after rival Home Depot reported mixed results for its second quarter as earnings beat analysts' estimates but sales fell short.

A DIMMER VIEW: Shares in Cree tumbled 13.8% after the maker of energy-efficient lighting gave investors a weak forecast as it deals with the fallout from the U.S. Hovnanian Enterprises vaulted 18.5% and LGI Homes rose 2.8%.

"Powell is in a hard spot in that you have a meeting coming up in September and everybody is looking to him", said Tom Martin, senior portfolio manager with Globalt Investments.

"I don't think there's anything in here that would be an 'aha!' warning sign to stocks that they're not going to get another rate cut." he said.

On July 31, policymakers cut the key interest rate for the first time in more than a decade, a move characterized in the minutes as "part of a recalibration. or mid-cycle adjustment". Concerns about an economic slowdown rose as the yield curve between 2-year and 10-year Treasuries briefly inverted last week.

US stocks opened higher on Wednesday, as strong results from Lowe's and Target boosted retailers, while investors awaited minutes from the Federal Reserve's July policy meeting due later in the day. This so-called inversion of the USA yield curve has accurately predicted the past five recessions. Microsoft gained 1% and Apple rose 1.2%.

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