It was a slow start to the trading session Thursday as Wall Street mulled over another round of retail earnings. However, reports that debt ceiling negotiations are progressing lit a fire under stocks, with all major indexes rallying hard into the close.
Target (TGT, +2.6%) was the latest major retailer to disclose its first-quarter results. The company said earnings were down 6.2% year-over-year to $2.05 per share, while revenue edged up 0.6% to $25.3 billion. The company also forecast lower-than-expected Q2 earnings and said it expects same-store sales to be down in the low-single digit percentage range vs analysts' estimates for a slight increase.
However, the relatively strong Q1 results kept full-year guidance intact, says David Wagner, portfolio manager at Aptus Capital Advisors, an Alabama-based registered investment advisor with $4.25 billion in assets under management.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"Consumables items continue to outperform lagging discretionary category sales," Wagner notes. "Lapping last year's freight, markdown and inventory issues ahead creates easy comparisons near term, but we acknowledge that an underwhelming Q2 guide is likely to make the year more weighted toward the second half."
Off-price department store operator TJX (TJX, +0.9%) was another retailer that unveiled its first-quarter results today. The company said earnings jumped 55% year-over-year to 76 cents per share, while revenue was up 3.3% to $11.8 billion. Same-store sales rose 3%.
"Some of the commentary [from Target and TJX] was similar to what we heard yesterday [from Home Depot (HD)] as there was some weakness in housing related big-ticket discretionary purchases due in part to some normalization in that category," says Michael Reinking, senior market strategist at the New York Stock Exchange. "Demand in staples categories was stronger. While the results are not perfect they also don't suggest that consumer spending is falling off a cliff. The focus shifts to Walmart (WMT) tomorrow."
Debt ceiling progress
While retail earnings were certainly a main discussion point early on in the session, focus quickly shifted to the debt ceiling. Following a Tuesday meeting with President Joe Biden, House Speaker Kevin McCarthy told reporters that he believes a deal is "possible" by the end of this week. Biden shared in the optimism, saying that "there's no alternative" but to do "the right thing for the country."
Those developments were well-received by the market. At the close, the Dow Jones Industrial Average was up 1.2% at 33,420, the S&P 500 was 1.2% higher at 4,158, and the Nasdaq Composite had gained 1.3% to 12,500.
Hedge funds' favorite blue chip stocks
"What's the smart money doing?" It's a question we try to answer each quarter following the required disclosure of asset managers' stock holdings. We do this not to duplicate the actions taken by hedge funds, other institutional investors and billionaires, but rather as a learning exercise – to observe what those with access to research and information typically not available to the average investor are doing with their capital.
Looking at the stocks Warren Buffett is buying and selling shows that the famed investor dropped more equities from the Berkshire Hathaway equity portfolio than he added during the first three months of 2023.
As for hedge funds, they remained heavily invested in blue chip stocks in the first quarter. However, they were also net sellers of Apple (AAPL) and Microsoft (MSFT) during a period in which they arguably should have been buying those Dow stocks instead of unloading them.
-
Should You Do A Roth IRA Conversion? Nine Things to ConsiderThe Tax Letter Thinking of converting a traditional IRA to a Roth IRA? The Kiplinger Tax Letter Editor highlights nine factors you should consider before making a move.
-
33 Stocks That Could Rally 50% or More This YearAnalysts say these S&P 500 stocks have at least 50% price upside over the next year or so.
-
Stock Market Today: Dow Drops 971 Points as Powell Pressure Ramps UpPresident Trump is increasing his attacks against Jerome Powell, insisting the Fed chair cut interest rates.
-
Wall Street Is Worried About Apple Stock. Should You Be Too?Analysts expect Trump's sweeping tariffs to have an outsized impact on Apple stock. How concerned should investors be?
-
The Stock Market Is Selling Off. Here's What Investors Should DoInvestors started fleeing the equities market en masse in response to the Trump administration's "jaw-dropping" tariffs. But the experts say don't panic.
-
Stock Market Today: Dow Rises 854 Points From Its Intraday LowIf there's one thing markets hate, it's uncertainty. But uncertainty is all they're getting these days.
-
Microsoft Stock: Innovation Spurs Its 100,000% ReturnMicrosoft's ability to recognize the "next big thing" has allowed sales – and its share price – to grow exponentially over the years.
-
Stock Market Today: Markets Celebrate Trump's Tariff DétenteConsumer discretionary stocks led 10 of the 11 S&P 500 sector groups well into the green.
-
Stock Market Today: Stocks Skid Into Another Risk-Off TurnThe promise of the AI revolution can't overcome flickering hopes for a "Fed put."
-
CoreWeave IPO: Should You Buy CRWV Stock?The CoreWeave IPO was the biggest public offering of the year so far, with the AI cloud company making its market debut on Friday, March 28.
