[New York Stock Market] Target Rises for 2 Consecutive Days Despite Earnings Warning... Nasdaq Up 0.94%

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices on the U.S. New York Stock Exchange all rose on the 7th (local time), closing higher for the second consecutive trading day despite a profit warning from retailer Target. Although downward pressure centered on the retail sector and concerns about economic slowdown persisted, the decline in Treasury yields, which had exceeded 3% the previous day, led the stock market's upward trend.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,180.14, up 264.36 points (0.80%) from the previous session. The S&P 500, focused on large-cap stocks, ended at 4,160.68, up 39.25 points (0.95%), and the tech-heavy Nasdaq closed at 12,175.23, rising 113.86 points (0.94%). The small-cap Russell 2000 also finished higher at 1,919.56, up 29.68 points (1.57%).

By sector, energy stocks stood out as oil prices approached $120 per barrel. ExxonMobil closed up 4.58% from the previous session. This is the first time since 2014 that ExxonMobil’s stock price has surpassed $100 per share. Phillips 66 rose 3.68%, and Chevron increased by 1.91%.

Department store chain Kohl's surged 9.54% on news that it had begun sale negotiations with a franchise group. JM Smucker rose 5.72% on earnings that exceeded market expectations.

On the other hand, Target closed down 2.31% after announcing that its second-quarter operating margin would be lower than initially expected. Target also revealed plans to reduce inventory by lowering product prices and canceling some orders. This sparked concerns about consumer spending contraction, leading to a 1.20% drop in the stock price of another U.S. retail giant, Walmart. Amazon also fell 1.43%.

Investors on this day closely monitored not only Target’s profit warning but also the World Bank’s (WB) downward revision of growth forecasts and movements in U.S. Treasury yields. Concerns surrounding the macroeconomy are considered factors that could halt the recent stock rally.

In its 'Global Economic Prospects' report released on this day, the WB forecasted global economic growth of 2.9% this year and warned of the possibility of 'stagflation,' where growth slows amid high inflation. This is a significant downgrade from the 4.1% growth forecast presented in January. David Malpass, President of the WB, stated, "The war in Ukraine, China’s lockdowns, supply chain disruptions, and the risk of stagflation are harming growth," and predicted that "many countries will find it difficult to avoid recession."

U.S. Treasury Secretary Janet Yellen appeared before the Senate Finance Committee hearing on this day and said, "We earnestly hope inflation will fall, but we expect it to remain at a high level," forecasting that U.S. inflation, at its highest level in 40 years, will continue to stay elevated. She described inflation as "an unacceptable level" and emphasized the need for appropriate fiscal policies to complement the Federal Reserve’s monetary tightening.

The market is closely watching the Consumer Price Index (CPI) for May, scheduled to be released on the 10th. This is considered one of the key indicators to gauge the Fed’s future tightening moves. If the increase slows compared to April, it could be interpreted as a sign that inflation has peaked.

On this day in the New York bond market, the 10-year Treasury yield fell back below 3%. The decline was driven by data showing that the U.S. trade deficit in April shrank by 19% compared to the previous month, which had recorded the largest deficit ever. Considering that the U.S. trade deficit had directly impacted first-quarter GDP growth, this improvement in the trade deficit is expected to have a positive effect on second-quarter growth.

Chris Senek, strategist at Wolfe Research, said, "Many investors are trying to gauge the timing of a recession," adding, "The stock market may experience significant ups and downs for the time being."

On this day at the New York Mercantile Exchange, the July contract for West Texas Intermediate (WTI) crude oil closed at $119.41 per barrel, up 91 cents (0.77%) from the previous session.

This content was produced with the assistance of AI translation services.