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The Dow Jones today dropped over 150 points in in pre-market hours after The Home Depot Inc. (NYSE: HD) fell short of revenue expectations in its Q1 earnings report Tuesday morning. The firm reported earnings per share (EPS) of $2.08 on top of $24.94 billion in revenue.
Wall Street had expected $2.06 on top of $25.2 billion. The miss was a surprise given the strength of the housing market, broader U.S. economy, and recent tax reform. Home Depot's miss was responsible for half of the Dow's losses in pre-market trading.
In addition to Home Depot, Tesla Inc. (Nasdaq: TSLA) fell more than 2.5% yesterday after Morgan Stanley (NYSE: MS) cut its price target from $376 to $291. The bank cited Tesla's pending reorganization as a major reason for the cut. It also noted that the firm is facing technical and fundamental hurdles. Here's more on why Tesla is struggling to make money.
Here are the numbers from Monday for the Dow, S&P 500, and Nasdaq:
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Now here's a closer look at today's Money Morning insight, the most important market events, and stocks.
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The Top Stock Market Stories for Tuesday
- Retail stocks are in focus after the U.S. Census Bureau released monthly sales figures before the bell Tuesday. The bureau said that retail sales increased by 0.3% in April, a figure that matched trade expectations. Markets had expected consumer spending to increase, however home improvement sales were not the major factor that most expected. This was evident from The Home Depot's earnings report.
- Markets are increasingly optimistic over U.S. trade negotiations with China. Chinese President Xi Jinping's No. 1 economic advisor will visit the United States this week to continue the nation's dialogue with America. In addition, roughly 100 companies and trade associations will be sounding off to the Trump administration about the potential impact of tariffs in the Chinese markets.
Stocks to Watch Today: TSLA, AMZN, GS
- Amazon.com Inc. (Nasdaq: AMZN) is in focus thanks to tax policy in Seattle. On Monday, the Seattle's City Council passed a bill that will tax Amazon and 131 other companies $275 per employee each year in order to create a fund to address homelessness in the Seattle. The tax is half what was originally proposed and remains a contentious issue for Amazon, which is the city's biggest employer.
- Goldman Sachs Group (NYSE: GS) is sounding the alarm about the state of the markets. The company warned that the U.S. budget deficit is increasing while America's unemployment rate is falling. This hasn't occurred since the World War II. The bank believes that the combination of the two could cause the Fed to spike interest rates in the near future. This comes at a time when the Fed has already lost control of interest rates.
- Look for additional earnings reports from Eagle Materials Inc. (NYSE: EXP), Bitauto Holding Ltd. (Nasdaq: BITA), Virtusa Corp. (Nasdaq: VRTU), Global Eagle Entertainment Inc. (Nasdaq: ENT), and Kamada Ltd. (Nasdaq: KMDA).
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, and consultant with degrees from Northwestern, Johns Hopkins, Purdue, and Indiana University. He is a seasoned financial and political risk analyst, with a focus on stocks, hedge funds, private equity, blockchain, and housing policy. He has conducted risk assessment projects for clients in 27 countries, and consulted on policy and financial operations for some of the nation's largest financial institutions, including a $1.5 trillion credit fund, a $43 billion credit and auto loan giant, as well as two of the largest Wall Street banks by assets under management.
Garrett joined Money Map Press as an economist and researcher in 2011, specializing in alternative strategies with an emphasis on fundamental and technical analysis.