August 16, 2022

Stocks were mixed after Monday's surge as investors waited on the FOMC Minutes to be released on Wednesday. Strong earnings from Home Depot (HD) and Walmart (WMT) helped the Dow Jones and S&P 500 extend their recent gains. However, there are still signs of economic weakness present with Housing Starts falling -9.6% vs. -2.5% estimated while Housing permits dipped -1.3% in July. Crude oil prices fell to a 6-month low on China's lower demand. Finally, the 10-year Treasury bounced back up to 2.82% which weighed on high-growth stocks and technology names and led to the NASDAQ ending the session slightly lower. Strong sectors were led by Consumer Staples (XLP), Financials (XLF) and Consumer Discretionary (XLY) while Technology (XLK) and Energy (XLE) brought up the rear. The DJIA tacked on 239.57 points (+0.71%) finishing at 34152.01. The S&P 500 added 8.06 points (+0.19%) and settled at 4305.20, while the NASDAQ lost 25.50 points (-0.19%) to 13102.55.

Breadth was mixed with advancing issues beating declining issues by 245 units on the NYSE and declining issues beating advancing issues by 425 units on the NASDAQ. Advancing volume was 64% on the NYSE while declining volume was 54% of the NASDAQ. The VIX fell 0.26 (-1.30%) and closed at 19.69. Crude oil prices lost 2.50 (-2.80%) and the September contract closed at $86.91 a barrel. Gold prices dipped 8.00 points (-0.44%) and finished at $1790.10 an ounce. Bitcoin (BTC) closed the session at $23946.34.

The Federal Open Market Committee will publish minutes from its policy meeting tomorrow. The minutes will be read closely for signals on the Fed's next move. Traders are now seeing a 60% chance of a 50-basis-point hike vs. 40% chance of a 75 basis-point hike. With more earnings from retail giants on tap for tomorrow, the better-than-expected recent earnings have been a surprise and are helping stocks recoup losses from the first half of the year. This latest run remains frothy at these levels, but good earnings in the face of economic uncertainty is seen as welcomed news for investors.

Earnings releases to watch for on Wednesday include: Cisco Systems (CSCO), Lowes (LOW), Target (TGT), Synopsis Inc (SNPS) and Krispy Kreme Inc (DNUT).

Wednesday's Market Moving Economic Calendar: Mortgage Apps, Retail Sales, Business Inventories and the EIA Petroleum Status Report. The Minutes from the July FOMC Meeting are released at 2:00 PM ET.

By Richard Cuvilly