US stocks wobble; Gap, Nordstrom sink on weak results

Damian J. Troise and Alex Veiga
Associated Press

Stock indexes were mixed on Wall Street Wednesday afternoon, barely budging through another bout of light but volatile trading ahead of the Thanksgiving holiday in the U.S.

The S&P 500 slipped less than 0.1% as of 2:33 p.m. Eastern. The Dow Jones Industrial Average fell 78 points, or 0.2%, to 35,732 and the Nasdaq was flat.

Stocks in the S&P 500 index were nearly evenly split between risers and decliners. Losses by health care companies, household goods makers and banks outweighed gains in real estate and energy stocks.

Investors kept an eye on the latest batch of quarterly report cards. Computer maker HP rose 10.3% for the biggest gain in the S&P 500 after reporting solid financial results. Autodesk slumped 16.8% after the design software company warned investors the pace of its recovery is being impacted by supply chain problems and pressure from inflation.

A mix of retailers that rely on direct consumer spending also turned choppy. Online crafts marketplace Etsy rose 5.5%. Gap nosedived 23.1% after the clothing chain said supply chain problems crimped its third-quarter earnings and revenue. Department store operator Nordstrom plunged 29.9% after reporting weak third-quarter earnings.

Energy stocks made gains as crude oil prices remained relatively stable and natural gas prices rose. Devon Energy rose 3.4%.

Bond yields fell. The yield on the 10-year Treasury slipped to 1.65% from 1.67% late Tuesday. That weighed down banks, which rely on higher yields to charge more lucrative interest on loans. JPMorgan Chase fell 0.7%.

Supply chain problems and pressure from inflation have been key concerns for a wide range of industries. Many companies have warned that they are having trouble meeting demand and are dealing with higher costs for raw materials. Those higher costs are being passed off to consumers, who have been paying more for everything from food and other staples to a wide range of retail items.

“You’ve got an environment where the persistence of supply chain issues is starting to wear on people,” said Eric Freedman, chief investment officer at U.S. Bank Wealth Management.

Consumers have so far absorbed the higher costs, but analysts are closely watching to see whether there is any eventual pullback in spending, especially with the key holiday shopping season starting.

The latest update on consumer spending shows an October rebound with a 1.3% rise, according to the Commerce Department. That’s slightly more than double the gain in September.

It’s been an otherwise uneventful and short week for investors. Markets will be closed on Thursday for the Thanksgiving holiday and will close early on Friday.

Investors received several upbeat economic updates on Wednesday.

The Commerce Department reported that the U.S. economy slowed to a modest annual rate of 2.1% growth in the October-December quarter, slightly better than its first estimate. But economists are predicting a solid rebound in the current quarter as long as rising inflation and a recent uptick in COVID cases do not derail activity.

The Labor Department reported that the number of Americans applying for unemployment benefits plummeted last week to the lowest level in more than half a century, another sign that the U.S. job market is rebounding rapidly from last year’s coronavirus recession.

The Federal Reserve will release minutes later in the day from its October policy meeting, potentially giving investors more details on the central bank’s plan to start trimming bond purchases that have helped keep interest rates low.