Dow drifts lower, S&P 500 loses grip on 4,700 as energy and tech sectors lead Wednesday slump

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By Mark DeCambre and Barbara Kollmeyer

U.S. stocks were trading modestly lower on Wednesday, a day after a positive session on Wall Street, driven in part by strong October retail sales data, brought the main indexes within striking distance of fresh records.

Nagging concerns about inflation and the economic recovery from COVID-19 have held markets in check from a more pronounced run-up in values, but a lack of alternatives and hope that consumers can continue to serve as a pillar of the economic rebound are supporting gains and a rotation into sectors of the market.

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On Tuesday, the Dow rose 54 points, or 0.2%, to close at 36,142. The S&P 500 rose 18 points, or 0.4%, to 4,700 and the Nasdaq Composite jumped 120.01 points, or 0.8%, to end at 15,973.

What’s driving markets?

Investors might be reluctant to push stocks to new heights on Wednesday after the Nasdaq Composite and S&P 500 ended yesterday’s session within a stone’s throw of all-time highs and the Dow industrials hovered just outside 1% from its closing record.

Market participants were emboldened by better-than-expected October retail sales data and a batch of third-quarter corporate earnings. Data showed retail sales jumped 1.7%, beyond forecasts for a 1.5% rise and the biggest gain since March when households received billions in federal stimulus money.

Shares of Walmart rival Target (TGT) fell Wednesday, even as the retailer beat quarterly earnings forecasts and lifted its forecasts, but warned about rising costs impacting margins.

Shares of Lowe’s (LOW) surged Wednesday, after the home improvement retailer reported fiscal third-quarter profit and revenue that beat expectations, a surprise increase in same-store sales and raised its full-year outlook.

However, Visa (V) fell sharply after Amazon (AMZN)said it will stop accepting payments made by its credit cards issued in the UK starting next year due high commission costs.

“While investors are not reversing course from the stock market, rotation in our opinion is to blame for the uneven market performances,” said Peter Cardillo, chief market economist at Spartan Capital, in a note to clients.

Meanwhile, the enthusiasm for buying might abate somewhat, as investors position for thinning trading volumes in the last full week of trading before Thanksgiving holidays.

Wednesday’s action will feature a packed schedule of appearances by Federal Reserve members, with that list including New York Fed President John Williams, Fed Gov. Michelle Bowman, San Francisco President Mary Daly and Fed President Charles Evans.

Oil prices were falling as investors awaited inventory data from the Energy Information Administration will be released Wednesday. Oil has also been pressured by fears of possible joint selling of oil reserves by both China and the U.S., following a virtual meeting between President Joe Biden and China’s Xi Jinping.

The American Petroleum Institute reported late Tuesday that U.S. crude supplies rose by 655,000 barrels for the week ended Nov. 12, according to sources. West Texas Intermediate crude fell 0.9% to $80.08 a barrel, while Brent crude fell 1% to $81.54 a barrel.

-Mark DeCambre

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(END) Dow Jones Newswires

11-17-21 1003ET

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