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Market Snapshot

https://www.briefing.com/stock-market-update

Dow 35343.28 -282.12 (-0.79%)
Nasdaq 14656.17 -137.58 (-0.93%)
SP 500 4448.08 -31.63 (-0.71%)
10-yr Note +2/32 1.253
NYSE Adv 902 Dec 2365 Vol 802.6 mln
Nasdaq Adv 1295 Dec 3055 Vol 4.1 bln

Industry Watch
Strong: Health Care
Weak: Consumer Discretionary, Financials, Industrials

Moving the Market

-- Home Depot (HD) falls 5% despite beating EPS estimates

-- Retail sales report for July was weaker than expected but industrial production for July was better than expected

-- Lingering Delta/growth concerns

S&P 500 and Dow snap winning streaks
17-Aug-21 16:20 ET
Dow -282.12 at 35343.28, Nasdaq -137.58 at 14656.17, S&P -31.63 at 4448.08

[BRIEFING.COM] The stock market struggled on Tuesday, with the S&P 500 (-0.7%) and Dow Jones Industrial Average (-0.8%) snapping five-session winning streaks. The Nasdaq Composite (-0.9%) and Russell 2000 (-1.2%) underperformed and declined closer to 1.0%, but the major indices did close off session lows on no specific news.

The market had a lot to chew on, including a 1.1% m/m decline in total retail sales for July (Briefing.com consensus -0.2%), a disappointing earnings reaction in Home Depot (HD 320.75, -14.30, -4.3%), another day of discouraging reports on the Delta variant, and a step taken from China to crack down on unfair Internet competition.

These were clear headwinds for shares of retailers and Chinese companies (China's Shanghai Composite fell 2.0% on Tuesday) while the broader market was caught up in growth concerns and expectations for a pullback. Weaker prices for oil ($66.61/bbl, -0.73, -1.1%) and copper ($4.21/lb, -0.12, -2.8%) corroborated growth concerns.

Despite the late comeback effort, the consumer discretionary sector (-2.3%) was still held back by Home Depot and its mega-cap components, while the materials (-1.2%) and industrials (-1.1%) sectors declined about 1%. The health care sector (+1.1%) was impressive with its 1.1% gain.

Homebuilding stocks were additionally pressured by a relatively disappointing NAHB Housing Market Index for August, which decreased to 75 (Briefing.com consensus 80.0) from 80 in July. The iShares US Home Construction ETF (ITB 71.19, -2.61, -3.5%) dropped 3.5%.

Strikingly, the Treasury market didn't seem too concerned about growth, and longer-dated yields even bounced off lows after the weaker-than-expected retail sales report. A better-than-expected industrial production report for July might have been a supportive factor.

The 10-yr yield settled unchanged at 1.26% after trading at 1.22% prior to the open. The 2-yr yield increased one basis point to 0.21%. The U.S. Dollar Index increased 0.5% to 93.12.

Walmart (WMT 150.70, -0.05, -0.03%) fared slightly better than the overall market after the company beat top and bottom-line estimates and issued upbeat FY22 EPS guidance. WMT shares closed fractionally lower despite the good news.

Reviewing Tuesday's economic data:

Total retail sales declined 1.1% month-over-month (Briefing.com consensus -0.2%) following an upwardly revised 0.7% increase (from 0.6%) in June. Excluding autos, retail sales declined 0.4% month-over-month (Briefing.com consensus +0.2%) following an upwardly revised 1.6% increase (from +1.3%) in June.
The key takeaway from the report is that there were declines in most retail categories. One notable exception was food services and drinking places (+1.7%), which just might be leading market participants to think that the impact of the Delta variant on the consumer's psyche isn't as bad as feared/reported and that there will be even more robust activity following any future data point that suggests Delta-related cases are peaking.
Total industrial production increased 0.9% in July (Briefing.com consensus 0.5%) following a downwardly revised 0.2% increase in June (from 0.4%). The capacity utilization rate increased to 76.1% (Briefing.com consensus 75.7%) from an unrevised 75.4% in June.
The key takeaway from the report is that it showed the potential for increased industrial production activity when the automobile semiconductor shortage issue can get worked out.
Business Inventories increased 0.8% m/m in June (Briefing.com consensus 0.8%) following an upwardly revised 0.6% increase (from 0.5%) in May.
The NAHB Housing Market Index for August decreased to 75 (Briefing.com consensus 80.0) from 80 in July.

Looking ahead, investors will receive Housing Starts and Building Permits for July, the FOMC Minutes from the July meeting, and the weekly MBA Mortgage Applications Index on Wednesday.

S&P 500 +18.4% YTD
Dow Jones Industrial Average +15.5% YTD
Nasdaq Composite +13.7% YTD
Russell 2000 +10.2% YTD