US stocks are softening ahead of the Fed’s Minutes as profit taking overtakes another round of upbeat corporate outlooks. Solid outlooks from Target and Lowes did not tell Wall Street anything new, which has returned the focus solely on the Fed’s tightening path. It is still about the Fed and we might not learn anything new from these Minutes. The data-dependent central bank is looking at a strong economy that could handle at the very least a couple of more massive 75 basis-point rate hikes if inflation does not cool quickly.
Retail Sales unchanged
Spending habits for the US consumer are moderating. The headline July retail sales reading was unchanged, a tick below the consensus estimate, as gasoline prices have come down. Traders were mostly upbeat about this report as the retail control group was higher. Despite what we’ve seen with widespread inflation, spending was healthy in both June and July. The economy is not weakening just yet as shoppers continue to spend, which means the Fed may have the go-ahead for a couple of more massive rate hikes.
Target share prices went on a rollercoaster ride after their earnings first dropped but shares pared losses after traders realized the inventory problem will be rectified in the back half of the year. Target’s second quarter posted an EPS miss of 33 cent miss and comparable sales gain of 2.6%, was lower than the consensus estimate of 2.84%. If Wall Street believes Target has got their inventory problem under control, the summer rally could continue.
Traders have gotten used to Elon Musk moving the price of Tesla, Bitcoin, or Twitter, but now that also includes a little-known soccer (football) club. Overnight, one of Musk’s many tweets included, “Also, I’m buying Manchester United ur welcome.” Manchester United is a publicly traded company and the share price rose shortly after the tweet. This will obviously be scrutinized and could ultimately lead to a small fine for the richest person in the world. Hours later Musk tweeted, “No, this is a long-running joke on Twitter. I’m not buying any sports teams.” MANU shares pared some of its initial rally, but ended up keeping a good portion of the gains. Musk later mentioned, “Although, if it were any team, it would be Man U. They were my fav team as a kid.”
Musk’s tweet coincides with Manchester United’s terrible start to the new season. After losing the first two games of the season, the loyal fan base wants the Glazer family out. The Glazer family is feeling the pressure and would be willing to sell a stake in the football club.
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