Stock market indexes pared gains Wednesday afternoon and were lower for a while as the euphoria of another mild inflation report faded. The retail sector got some favorable news, including a surprisingly good earnings report from Target.
The S&P 500 was up 0.2%, while the Nasdaq composite rose only 0.1%. The Dow Jones Industrial Average climbed 0.4%.
Small caps continued to outperform, although the Russell 2000 trimmed its gain to 0.2%. The index climbed to its 200-day moving average, where it has met resistance today. Watch for a possible pullback on the index in the coming days.
Volume fell on the New York Stock Exchange and Nasdaq compared with the same time on Tuesday, when NYSE and Nasdaq trading was the highest since Sept. 15.
Breadth so far is positive in the stock market today, with advancers about 8-to-5 over decliners on the two exchanges.
Inflation, Retail Data Cheer Stock Market
The 10-year Treasury yield bounced 9 basis points to 4.53%.
The producer price index slid 0.5% in October, the largest month-to-month decline since a 1.2% slide in April 2020, the Bureau of Labor Statistics said. On an annual basis, wholesale prices rose 1.3%, which also extended a cooling price trend.
Economists tracked by Econoday had forecast a 0.1% monthly increase and 2% climb in the annual PPI. Excluding food and energy costs, the PPI was flat in October and up 2.4% year over year.
October retail sales fell 0.1%, the first decline since April but slightly less than what economists had feared. Excluding autos, sales climbed 0.1%, which also was better than expected.
"Consumer spending momentum in Q4 will likely slow but the solid appetite for online shopping bodes well for the upcoming holiday sales period," LPL Chief Economist Jeffrey Roach said in a note to clients. "Easing inflation pressures will provide some salve for the markets but some forward-looking indicators such as delinquencies hint at some emerging challenges as we head into 2024."
The sector got a boost from Target, which soared 17% in heavy trading after its October-quarter earnings report. The company's earnings jumped 36.4% to $2.10 per share, well above analysts' estimates. Sales fell 4.2% to $25.4 billion.
The stock is on track for its best day since Aug. 21, 2019, when it rose 20.4%, according to Dow Jones Market Data. Shares climbed back above their 50-day moving average for the first time since August.
Other Retailers Fall On Q3 Results
But a few other retailers came out on the wrong end of expectations on Wednesday's stock market.
Advance Auto Parts reported a surprise third-quarter loss. The company also slashed guidance and announced a cost-cutting program. AAP stock, however, reversed higher Wednesday afternoon after bouncing off its slumping 50-day moving average.
TJX Cos. fell 3.2%, setting itself back in what had been a well-behaved flat base. The discount chain's sales and profit topped estimates, but its current-quarter forecast unnerved investors. It expects same-store sales to rise 3% to 4% and earnings of $1.07 to $1.10 per share. The earnings forecast lagged estimates.
Urban Outfitters broke out of a cup-with-handle base, topping a 36.10 buy point in heavy volume. The buy range extends to 37.91. Guess also broke out of a cup-with-handle base, topping a 23.73 buy point. The buy zone goes to 24.92. Both apparel chains will report earnings Tuesday after the close.
Overall, retailers were higher. The SPDR S&P Retail ETF jumped 2.1% and is above the 200-day line for the first time since early September.
In another breakout, Arcellx gapped above the 48.38 buy point of a cup with handle in big volume, but most gains faded at midday. The biotech is deepening a partnership with Gilead Sciences on cancer treatments.
China, Tesla Among Stock Market Movers
China-based online retailer JD.com jumped nearly 8% after sales and earnings beat views. JD is the best-performing stock today in the Nasdaq 100.
Tesla climbed 3% and is back above its 50-day moving average. The electric-vehicle maker's insurance registrations in China fell nearly 10% last week, while the company raised prices in China on its rear-wheel drive versions of the Model 3 and Model Y.
China-based rival XPeng fell nearly 2% after it reported disappointing results for the third quarter. The stock is battling to hold above its 50-day line, but so far no buy area has emerged.
Shopify, F5, Wingstop, Palantir Technologies and Braze also are trying to break out of bases.
The Innovator IBD 50 ETF reversed and sank 0.4%. It would no doubt be much higher if not for Global-e. The global e-commerce software maker plummeted 27% after its earnings report.
Ireland-based airline Ryanair Holdings rose above a 112.75 buy point in active trading. PDD Holdings, the Chinese parent of ultra-low-cost shopping app Temu, gapped up to a new high.
