Stocks fell on Tuesday, Nov. 14, as investors turned their attention from corporate concerns to Capitol concerns. With earnings season nearing its end, markets continued to grapple with uncertainty over the fate of U.S. tax legislation.
The Dow Jones Industrial Average slid 73 points, or 0.31%. The S&P 500 Index fell 7 points, or 0.25%, while the Nasdaq tipped lower by 16 points, or 0.24%.
The Dow Jones Industrial Average and S&P 500 snapped two-day losing streaks on Monday, Nov. 13, despite Dow component General Electric Co. (GE - Get Report) posting its worst performance since 2009 after announcing it would slash its dividend in half. By Tuesday, GE had continued losses, weighing on the blue-chip index. Of its 30 names, only six Dow components were in the green Tuesday.
GE was the Dow's worst performer on Tuesday, shedding 5% of its value. DowDuPont Inc. (DWDP) was the second-worst performing Dow name, down 2.2%. Goldman Sachs (GS - Get Report) was third, falling by 1.3%.
Republicans in the House assert they'll have enough votes to pass their version of tax reform this week. The Senate GOP plan, though, might face more of a struggle. That version would add $1.5 trillion to the federal deficit over 10 years and eliminate widely regarded deductions such as state and local taxes. The proposed bill requires 60 votes for passage, meaning legislators will have to lobby for votes from across the aisle.
President Donald Trump is expected to address lawmakers on tax legislation on Thursday, Nov. 16. Treasury Secretary Steven Mnuchin said at a Wall Street Journal CEO Council event that the White House will not accept any legislative compromise that puts the corporate tax rate any higher than 20%.
Economic data from China showed the country had firm gains in retail sales and industrial outputs, but figures missed economists' estimates and suggested slowing growth in the country. According to the National Bureau of Statistics, China's retail sales last month increased 10% from the same time last year. Industrial output was 6.2% higher than a year earlier, but Wall Street had expected it would grow 6.3% in October.
The U.S. Producer Price Index for October increased 0.4%, topping expectations the figure would grow 0.1%.
Leading central bankers including Federal Reserve Chair Janet Yellen, European Central Bank President Mario Draghi, Bank of Japan Gov. Haruhiko Kuroda and Bank of England Gov. Mark Carney took part in a discussion on policy communications and guidance Tuesday. Yellen avoided near-term predictions, insisting that guidance from the Fed remains contingent on the overall economic outlook and reiterating that forecasts are not always set in stone.
"Market participants seek more than central banks are prepared to offer," Yellen said.
St. Louis Fed President James Bullard appeared at an economic breakfast in Louisville, Ky., early Tuesday, where he said there is no immediate need to hike interest rates because inflation levels will not return to the Fed's targets anytime soon.
"Inflation data during 2017 have surprised to the downside and call into question the idea that U.S. inflation is reliably returning toward target," dovish Bullard said. "The current level of the policy rate is appropriate given current macroeconomic data."
Bullard's comments are not necessarily representative of the sentiment of his peers at the Fed. Most investors expect the central bank's Federal Open Market Committee will move to increase interest rates at its next meeting on Dec. 12 and Dec. 13.
Home Depot Inc. (HD - Get Report) reported third-quarter earnings of $1.84 a share early Tuesday, topping forecasts by 2 cents. Revenue of $25.03 billion also topped Wall Street estimates. The stock lost 0.47% early Tuesday.
Advance Auto Parts Inc. (AAP - Get Report) topped Wall Street's expectations with adjusted earnings of $1.43 a share in the third quarter. FactSet analysts forecast earnings of $1.21 for the Roanoke, Va.-based auto parts retailer.
The company's same-store sales posted a wider-than-expected decline, down 3.4% compared to expectations of a 2.1% drop. Revenue also missed forecasts, totaling $2.18 billion for the quarter compared to expectations of $2.21 billion.
Shares climbed 19.8% on Tuesday. Since the start of the year, the stock has shed over 41% of its value.
Dick's Sporting Goods Inc. (DKS - Get Report) beat third-quarter estimates Tuesday, posting adjusted per share earnings of 30 cents and topping analysts' expectations of 26 cents. Revenue beat forecasts, too, totaling $1.94 billion compared to estimates of $1.89 billion for the three months ended Oct. 30. Same-store sales fell 0.9% in the quarter, which was a narrower-than-expected decline. The company's rosy earnings beat was muted by its updated outlook: Dick's said 2018 earnings could fall as much as 20%. Shares dipped 4.8%.
TJX Cos. Inc. (TJX - Get Report) posted diluted earnings per share of $1 for the quarter ended Oct. 28, which was in line with analyst expectations. The off-price retailer reported net sales of $8.8 billion, which increased 6% from the same period last year and were in line with Wall Street expectations. Comparable sales were flat, whereas they increased 5% this time in 2016.
The company said hurricanes had a negative impact during the quarter. Warmer weather also discouraged shoppers from stocking up on sweaters and jackets for cooler months, TJX said in a statement. Shares fell 3.5%.
West Texas Intermediate crude oil futures slipped $1.10, or 1.94%, to $55.66 after the International Energy Agency said the oil price rally runs the risk of being short-lived and that global oil demand could weaken for the rest of this year and into next year.
Energy stocks fell some on the news. The Energy Select Sector SPDR ETF (XLE - Get Report) dipped 0.98%, the United States Oil Fund LP ETF (USO - Get Report) declined 1.85% and the Vanguard Energy ETF (VDE - Get Report) fell 1.15%.
Private-equity firm Roark Capital Group reportedly has made a $2.3 billion bid for casual dining chain Buffalo Wild Wings Inc. (BWLD) . The bid came just months after CEO Sally Smith announced she would retire by year-end amid pressure from activist investors.
Shares of Buffalo Wild Wings soared 24.6% to $146.05 Tuesday, following a report about the bid from The Wall Street Journal late Monday.
Roark has a history of acquiring struggling casual dining chains and turning them around, as was the case with Arby's, which it bought in 2011, and Auntie Anne's Inc., which it purchased in 2010.
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But some industry sources said Buffalo Wild Wings has enough livelihood to fend for itself, especially as investors were already optimistic about the prospects for a new CEO. The Minneapolis-based company beat Wall Street expectations last month with its third-quarter earnings report.
"We don't believe the Buffalo Wild Wings brand is dead. It still has good mindshare with consumers," said Jeremy Hamblin, a senior analyst at Dougherty & Co. "You can argue that most restaurant operators have struggled in recent years because of higher labor costs and lower traffic trends in casual dining."
Anheuser-Busch Inbev SA (BUD) shares extended declines Tuesday after the world's biggest brewer shifted around its North America leadership team amid questions over the sustained weakness of its domestic beer sales.
AB InBev tapped Michel Doukeris to head its North America division and replace João Castro Neves in a bid to stem falling U.S. sales, where its Bud Light brand holds a 19% market share but is facing persistent challenges from microbrewers and changing consumer habits.
In October, the company reported a 6.1% decline in total volume in the third quarter and Budweiser revenues declined by 2.2%. Sales in the U.S. have been under pressure from craft beers, with the company's market share in the U.S. falling to 44.1% in 2016 from 50.6% in 2008, according to research firm Euromonitor International.
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