Market backdrop
The S&P 500 posted three straight days of losses, with futures near flat as it tried to steady. Moderna (MRNA) and Merck (MRK) moved up. Geopolitical tension keeps weighing on stocks. Early Monday and Tuesday, rising yields pressured equities: the benchmark 10-year Treasury hit over 1.5-year highs and the 30-year hit 19-year highs, then eased, which cut some pressure on stocks.
The U.S. and Iran are not negotiating at all, and that pushed crude oil higher. Crude topped $85 a barrel earlier in the session; Brent traded far above $90. This tension stays the main theme.
Semiconductors dragged the market the prior day. The Philadelphia semiconductor index fell nearly 5%, and the DRAM ETF covering memory chip names dropped 8.7%, pressuring the NASDAQ 100 and tech broadly.
The consumer is split
Retail earnings show a bifurcated consumer rather than a straight-line recovery. Home Depot (HD) reported decent earnings but the stock did little. Lowe's (LOW) showed weakness. Target (TGT) is doing better. Walmart (WMT) reports tomorrow.
The FOMC minutes come out this afternoon and should clarify the three dissenters who wanted a 25 basis point rate hike while the vote held rates unchanged. Odds of a September rate hike sit around 30 to 40%, pushed back after last week's weaker inflation data, softer retail sales, and weaker jobs numbers over the past couple of months.
Target (TGT)
The turnaround continues. The stock traded down to about $144 post-earnings and was off less than 1% in pre-market, trying to get back to unchanged. EPS beat expectations well, even setting aside a $165 boost from tariff refunds - a solid beat on its own. After a rally of over 55% so far in 2026, some investors may be taking profits.
The report was strong across the board. Every segment was positive. Comparable store sales rose over 3.5%, above the roughly 2.4% the street expected, marking the second straight quarter of higher comparable same-store sales. Discretionary items sold better, e-commerce picked up, and Target Circle memberships grew. Target lowered prices on about 10,000 items during the quarter, which helped sales.
Target raised full-year guidance to between 990 and 1090, above the prior 825 to 925 range. CEO Fiddelke stayed cautious on the turnaround, saying two quarters do not make a complete trend. The company is redoing stores and spending capital on it.
Lowe's (LOW)
A different story. Lowe's did okay in professional services, which grew a little, but do-it-yourself customers remain a pain point and under pressure. DIY is over 70% of Lowe's business, even as it pushes deeper into pro services to compete with Home Depot (HD).
The company did not cut full-year guidance but trimmed the outlook. The bottom end now expects total sales of about $92 billion, versus a prior $92 to $94 billion. Comparable sales are expected to be flat going forward, down from flat to up 2% - weaker than the street wanted. Revenue came in just below $26 billion, lighter than expected. Even with tariff refund funds, the company did not beat.
Total sales for the quarter rose to $25.96 billion, up from $23.96 billion a year earlier - $2 billion in growth. Comparable sales grew 2%, helped by strong pro-segment performance.
Housing and mortgage rates
Mortgage applications data showed a 30-year fixed rate of 6.77%. Until mortgage rates crack lower, home improvement chains including Lowe's (LOW) and Home Depot (HD) will keep struggling. If 30-year fixed rates fall under 6% and the housing market improves, that could be a real boost for these companies.
