U.S. stocks end lower after Home Depot outlook
STORY: U.S. stocks fell on Tuesday after a disappointing forecast from Home Depot and mixed broader retail sales.
The Dow closed down 1 percent, the S&P 500 lost more than six-tenths of a percent and the Nasdaq shed about two-tenths.
Home Depot was the biggest drag on the Dow – falling more than 2% - and among the heaviest weights on the S&P after the home improvement giant reported a first-quarter sales decline of more than 4%. More worrisome was a cut to its annual sales forecast - its first since 2009. Shares of smaller rival Lowe's fell nearly 1.2%.
But Dryden Pence, Chief Investment Officer at Pence Wealth Management, says that Home Depot’s numbers, on the surface, don’t tell the whole story.
“You look deep inside those numbers, you find that of the 4.5% percent decline in sales numbers, roughly half of that, or 2% of it, was attributable to a decline in lumber prices. I mean, lumber prices came down, year-over-year, like 75%. So if you kind of look into the math, you find that you had some anomalies occur, you had some commodity prices spike up.... [FLASH] But, remember, earnings were pretty close to on-target or a slight beat for Home Depot.”
In other movers, Horizon Therapeutics tumbled more than 14% as the Federal Trade Commission said it would file a lawsuit to block Amgen's $27.8 billion deal to buy the company. Shares of Amgen fell 2.4%.
And shares of Capital One climbed 2% a day after Berkshire Hathaway disclosed it had taken a stake of nearly $1 billion in the stock.
The Commerce Department on Tuesday reported retail sales rose 0.4% in April - short of the 0.8% estimate - but core retail sales rebounded. Those exclude automobiles, gas, building materials and food services.
Recent data has indicated a slowdown in the U.S. economy following a string of rate hikes by the Federal Reserve to fight inflation.
Meanwhile, lawmakers on Tuesday held a new round of talks about raising the debt ceiling. The Treasury Department has warned it could run out of money as soon as June 1 without a deal, which would trigger a default and likely cause a sharp economic slump.