Stock market today: Dow tumbles from highs, Target and Visa stocks tumble

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It remains to be seen whether Federal Reserve Chairman Jerome Powell will be reappointed.

Olivier Douliery / AFP / Getty Images

Stocks were down on Wednesday as the corporate bond market sent a somewhat worrying message.

In afternoon trading, the Dow Jones Industrial Average lost 223 points, or 0.6%, after the index climbed 54 points on Tuesday to close at 36,142. The S&P 500, which remains fair below its record, lost 0.2%. The Nasdaq Composite fell 0.3%.

Credit markets were sending a negative signal on corporate earnings. The exchange-traded fund iShares iBoxx High Yield Corporate Bond (ticker: HYG) has seen its share price drop 0.9% since November 5, when it hit a high for more than a month. This means that investors are abandoning risky corporate bonds, indicating less confidence in the ability of companies to repay their debts. The bond ETF was down 0.1% on Wednesday.

In addition, credit spreads – the additional yield demanded by investors to buy risky credits over safe government bonds – widened; a Bank of America high yield bond index now shows a spread of 3.1 percentage points, down from 3.08 earlier this month, according to the St. Louis Fed. Essentially, investors demand a higher yield from these bonds – lowering their prices – in return for their higher perceived risk.

“These are worrying trends,” wrote Andrew Brenner of NatAlliance Securities.

Meanwhile, Treasury Secretary Janet Yellen has said the government could default on its financial obligations by December 15 if Congress does not raise the debt ceiling. Part of the worry is a transfer the government will need to make soon on the $ 1 trillion infrastructure bill President Biden signed this week.

This is a slight concern for the markets, but it should subside as the government is expected to fix the issue soon. “The market knows Washington, DC is waiting until the last minute,” said Dave Wagner, portfolio manager and analyst at Aptus Capital Advisors. “There is volatility around this whole event.”

Elsewhere, UK inflation has been higher than expected. Prices rose 4.2% year-on-year, up from expectations of 3.9% and above the previous reading of 3.1%. This could make the Bank of England, which had recently said it would delay the hike in interest rates, more compelled to hike.

Abroad, in Tokyo


Nikkei 225

fell 0.4%. The


FTSE 100

fell 0.5% in London, underperforming other European indices.

Here are seven actions in motion Wednesday:


Visa

(symbol: V) the stock fell 6.8% after


Amazon.com

(AMZN) said it will stop accepting Visa UK credit cards due to high fees from the card issuer.


Target

The stock (TGT) fell 4.9% after the company reported earnings of $ 3.03 per share, beating estimates of $ 2.83 per share, on revenue of 25.65 billion dollars, higher than expectations of 24.78 billion dollars.


TJX Cos.

The share (TJX) rose 6.9% after the company reported earnings of 84 cents per share, beating estimates of 81 cents per share, on revenue of $ 12.5 billion, higher than expectations of $ 12.3 billion.


Lowe’s Cos.

The (LOW) share gained 1.5% after the company reported earnings of $ 2.72 per share, beating estimates of $ 2.36 per share, on revenue of $ 22.9 billion of dollars, higher than expectations of 22.1 billion dollars.


Roku

(ROKU) stock fell 12% after being demoted to Sell Neutral at Moffett Nathanson.


You’re here

The stock (TSLA) rose 3.7%, building on gains of 4.1% on Tuesday, as the stock continues to rally after coming under pressure following the sell-off of shares by the CEO Elon Musk.


Nvidia

(NVDA) fell 2.2% ahead of earnings coming later in the day.

Write to Jacob Sonenshine at [email protected]


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