Maybe it’ll turn out to be ”opposite” day. Another session when the market behaves in exactly the inverse manner that traders expect.
With futures higher, that would mean traders take profits moments into the trading session, and sink market averages shortly after the open. Could happen. Might not. Things have taken a somewhat unpredictable turn.
Wednesday’s session proved itself to be a good example of Wall Street’s ability to confound expectations. Ahead of yesterday’s trading session, futures pointed to a flatter-than-road-kill start to the trading session. It looked for all the world as if Wall Street would bide its time until it got the outcome of the Federal Reserve meeting and the accompanying commentary. Wouldn’t have been surprising. That kind of action happens all the time.
Instead, the market shot out of the gate like Usain Bolt. By the time the market tip-toed up to the release of the FOMC statement, the S&P 500 (GSPC)had posted a 1.5% gain, and wiped out the loss it suffered Tuesday. The index finished the session higher by 1.2%.
After the fact, analysts suggested the marketliked what the Fed had said in its statement: that theeconomy has been levelling off, that it wouldn’t raise rates anytime soon, and that it wasn’t pumping any more capital into its quantitative easing policy of purchasing long-date Treasuries to help keep mortgage rates low, but that it would wind that program down more slowly, stretching it until Octoberinstead of its planned September conclusion.
No question, that’s what the Fed said. And, arguably, that’s all bullish stuff. (The Wall Street Journal took that argument in Thursday’s edition, insisting in an article that the good stuff the Fed is doing now with rates are going to make it more difficult to manage monetary policy down the road.) But the fact is, stocks finishedabout where they were before theFOMC comments came out. Itwas kind of a l! eathery day.
Thursday looks more constructive, and more straight-forward. Futures are pointed higher, but notquite as bullish asthey showed beforeWall Street got a glance at some key data.
Retail salesrecorded an unexpected dropin July, as the declining price of gasoline offset the boost retailers got from the government’s cash-for-clunkers program.For the month, the data showed a decline of one-tenth of one percent, well shy of forecasts that it’d show an eight-tenths of one percent increase. Ex-autos, sales fell six-tenths of one percent; economists had been anticipating a one-tenth improvement.
On the other hand, Wal-Mart Stores (WMT)stillhave moved higher in the premarket, showing a rise of about 2%following its mixed second-quarter financial performance. The world’s largest retailer outpaced profit expectations, posting 88 cents a share, two cents ahead of forecasts. However, its revenue – hurt, in part, by currency translation – declined 1.4%, falling short of estimates.
Its same-store sales – a big X-factor in its performance, since the company stopped providing monthly sales updates after posting its first-quarter results in April – declined 1.2%, instead of the flat to up 3% guidanceWal-Mart gave for the quarter.
It said third-quartercomps could come in flat to up 2%. It did boost the low end of its profit guidance for the year, though it left the high end unchanged.
Shares of Kohl’s (KSS)have retreated 3%. It recorded slightly better-than-expected quarterly results, but guided current-quarter EPSbelow forecasts, and projected that same-store sales coulddrop 3% to 5%.
Treasuries rebounded from an early selloff after those disappointing retail sales dashed hopes the consumer had started spending, and would lever the economy back to growth faster than had been expected. The dollar has improved, and that’s helped to lift crude prices.
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