The Dow Jones industrials lagged the market’s cautious open on Wednesday, following North Korea’s retreat from its commitment to disarmament talks, and as bond yields hovered near seven-year highs. Significant early moves came from Teva Pharmaceuticals (TEVA), Macy’s (M), Micron Technology (MU), Tencent Holdings (TCEHY) and Boot Barn (BOOT).
The Dow Jones industrials edged up less than 0.1% below fair value. About half the index traded higher. Walmart (WMT) rose 0.6% to lead the upside. 3M (MMM) led the decliners, down 0.9% after an analyst downgrade.
The Nasdaq Composite eked ahead 0.1% in early stock market action. The S&P 500 defended a fractional gain.
Bonds inched higher, trimming the 10-year Treasury yield 1 basis point to 3.06%. The dollar was mixed, up vs. the euro, down against the yen. Raphael Bostic, president of the Atlanta Federal Reserve Bank, is scheduled to speak in Augusta, Ga., before the market opens.
Oil prices edged lower, with U.S. benchmark West Texas Intermediate trading down 0.4% to $71 a barrel. Data released by the American Petroleum Institute late Tuesday showed an unexpected buildup in weekly oil inventories. The API data often foreshadow results from the Energy Information Administration’s weekly crude stockpiles report, which is due out at 10:30 a.m. ET.
Housing starts slowed sharply in April, with the Commerce Department reporting an annualized pace of 1.287 million starts. That was down from March’s rate of 1.319 million, and well below consensus expectations for an uptick to 1.324 million. Building permits eased slightly, to a pace of 1.352 million. The number was below March’s 1.354 million rate, but better than the decline to 1.350 million forecast by economists.
Global Markets: Japan’s GDP Contracts, North Korea Maneuvers
Global markets recovered from an initial dip, but remained cautious following news late Tuesday that North Korea had reportedly canceled talks recently launched with South Korea. The country apparently has threatened to also abandon the planned June 12 summit between North Korean leader Kim Jong Un and President Trump.
Across Asian stock markets, the Shanghai Composite fell 0.7% and Hong Kong’s Hang Seng index took a 0.1% loss. In South Korea, Seoul’s KOSPI index shed its early losses and closed a fraction higher.
In Japan, Tokyo’s Nikkei 225 dipped 0.4% after data showed Japan’s economy contracted 0.6% — more than expected — in the first quarter. That broke an eight-quarter growth streak and raised questions about Prime Minister Shinzo Abe’s economic reforms, as the country wades into renegotiating its trade protocols with the U.S.
Stocks in Europe traded with narrow gains in their afternoon sessions. The DAX in Frankfurt led, up 0.3%.
Buffett Boosts Teva, RBC Initiates Micron, Boot Barn Set To Exit Buy Range
Teva sprung 4.3% higher, after being lifted by news late Tuesday that Warren Buffett’s Berkshire Hathaway (BRKB) had more than doubled its stake in the company to 40 million shares. Apple (AAPL) slipped 0.2% in early action, despite Berkshire confirming it had become the tech giant’s second-largest shareholder.
Memory chip maker Micron Technology swung 2.8% higher, running at the head of the Nasdaq 100. RBC Capital initiated coverage on the stock with an outperform rating and a price target set at 80. Shares are shaping a late-stage cup base with a possible buy point at 63.52.
Boot Barn Holdings kicked 18% higher. The Irvine, Calif.-based Western wear chain reported strong fiscal fourth-quarter sales and earnings beats, including a 12.1% leap in same-store sales. The big-volume gain sent shares beyond a buy range above a 20.41 buy point in a three-month cup base.
U.K.-based Micro Focus International (MFGP) hammered ahead 5.9% in opening action. The company said the early closing of a $40 million deal would drive its six-month revenue, through April, above the forecasted range. The company had guided to revenue declines between 9% and 12%. Micro Focus paid $8.8 billion to acquire the software arm of Hewlett Packard Enterprise (HPE) in September 2016.
Tencent, Macy’s Spike On Q1 Results
China-based Tencent Holdings surged 6.8%, despite reporting mixed first-quarter results. Revenue topped analyst targets. Earnings missed, but the stock had taken a sharp dive in March, after warning that development spending could crimp profits. The gain lifted Tencent shares above resistance at its 10-week moving average and up the right side of a three-month consolidation.
Macy’s rung up a 7% gain to lead the S&P 500, after reporting a blowout win in its first quarter. A 40% gain in earnings per share added a second quarter of positive earnings gains. And a 2% revenue increase marked its first revenue rise since the first quarter of 2015. The stock has been grappling to hold support at its 10-week moving average, after a breakout attempt in April failed.