Day Traders Diary

11/17/21

The major averages pulled back once again even though we received strong earnings reports from big-box retailers against lingering inflation concerns.

The Dow Jones Industrial Average fell 211 points, or 0.5%, now 1.6% from its record. The S&P 500 dipped 12 points while the Nasdaq Composite fell 52 points or 0.33%. The Dow was dragged down by a 5% drop in Visa.

The markets are coming off a more positive day in which all three of the major averages moved upward after economic data and corporate earnings signaled U.S. consumers are ramping up spending despite rising prices. The S&P 500 and Nasdaq are still higher for the week, however, while the Dow is lagging.

Retail giant Target posted beats on the top and bottom lines, but its CEO noted rising costs may have an impact on the company going forward as it plans to absorb those costs rather than pass them onto the customer. Shares slid about 4.5%.

Home improvement giant Lowe's saw shares rise 1.5%, however, after the company not only topped estimates from the Street but also raised its full-year sales forecast. And shares of TJX jumped 6.3% after the apparel and home retailer reported a quarterly earnings beat on the top and bottom lines as well as a same-store sales increase of 14% year-over-year.

Walmart on Tuesday reported better-than-expected results, though its shares declined.

The SPDR S&P Retail ETF lost 2% Wednesday, but retailers have been encouraged by same-store sales gains driven largely by higher traffic and solid digital growth amid pent-up demand from consumers over the summer.

Still, as investors allow themselves to enjoy the momentum of the year so far and a holiday shopping push into the end of the year, they're grappling with how long beyond the holidays the good times can last and what 2022 will look like, according to Buchanan.

Elsewhere, Tesla climbed nearly 4% as the stock continued its rebound from a 15.4% loss last week, when CEO Elon Musk began his Tesla stock sell-off.

Microsoft saw its shares climb slightly to hit a new intraday record as investors rotated out of value stocks — financials were largely in the red and energy stocks were among the biggest laggards in the S&P — and bet on Big Tech going into the end of the year. Amazon ticked up also and Apple rose nearly 2%.

The tech-heavy Nasdaq is leading the major averages for the quarter, up about 10%.

On the downside, Visa shares slumped almost 5% after Amazon said it will stop accepting payments made with Visa credit cards issued in the U.K. starting next year. That change came shortly after Visa raised its interchange fees for transactions between the U.K. and European Union. Mastercard, which has also increased its U.K.-EU interchange fees, fell 2.7% with Visa.

Shares of chipmaker Nvidia are 3.8% lower ahead of its earnings report after the bell.

Bath & Body Works, Victoria's Secret and Cisco Systems are also on deck.