Stocks rise following three-day slide for Dow, S&P 500

Unlike large retailers such as Walmart, which seem to be somewhat optimistic on the consumer, several smaller consumer-facing names appear to be painting a more troubling picture.

Take a look at some of the companies that have cut or posted disappointing forward guidance this week:

• Petco: It slashed its full-year revenue and earnings per share guidance, with both falling way below Street consensus.
• Brinker: The Chili’s parent reported fiscal year earnings guidance that was well below expectations. The move came as its latest quarterly report showed weak gross and operating margins for the previous quarter.
• Nordstrom: The department store drastically slashed its full-year earnings per share guidance, as the company works on “aggressively right-sizing” its inventory.
• Advance Auto Parts: The company cut its full-year earnings and revenue guidance, noting that its do-it-yourself business suffered in the latest quarter due to rising fuel prices and broader inflation, and the company expects weakness to continue for the rest of the year.

—Robert Hum, Fred Imbert

The Global X Uranium ETF is on pace for its best day this year. The ETF’s last biggest move was Oct. 12, 2021, when it gained 11.65%.

Shares of the fund have risen more than 1.9% this month and are on track to finish their second straight positive month. The ETF was last up 10.1%.

Companies including Australia’s Paladin Energy and Canada-based Laramide Resources and Cameco are among the fund’s holdings. All three stocks are trading up at least 10% on the day.

— Samantha Subin, Gina Francolla

Treasury yields are climbing ahead of the Federal Reserve’s annual symposium in Jackson Hole, Wyo. on the idea that the market view has been more dovish than the central bank.

The three-day event starts Thursday, and the market is most focused on a Friday morning speech from Fed Chairman Jerome Powell.

The market has been anticipating a hawkish Fed based on comments ahead of the meeting. For instance, some Fed officials have been pushing back on a market view that the Fed could cut interest rates not long after it finishes raising them next year.

Yields, which move opposite price, have been moving higher on expectations that Powell will emphasize an aggressive policy of battling inflation and holding rates at high levels for longer. The 10-year yield reached 3.11% Wednesday morning, the highest since late June.

“I think what the bond market is looking to try to understand is Powell’s view of this policy reversal in 2023,” said Jim Caron of Morgan Stanley Investment Management.

— Patti Domm

Intuit was the best-performing stock in the S&P 500, up 5.5%, following strong earnings results and upbeat guidance. CEO Sasan Goodarzi said in a statement that the company is “more confident than ever” in its long-term business strategy.

In its fiscal fourth quarter, the business software company behind TurboTax and QuickBooks reported earnings of $1.10 per share on revenue of $2.4 billion. Analysts surveyed by Refinitv were expecting earnings of 98 cents per share on revenue of $2.34 billion in the quarter ending June 30.

Meanwhile, Advanced Auto Parts was the worst-performing stock, down 9.6%, after missing earnings expectations and lowering its full-year guidance.

The auto parts retailer reported earnings of $3.74 per share on revenue of $2.67 billion. Analysts surveyed by Refinitiv were expecting earnings of $3.76 per share on revenue of $2.75 billion.

— Sarah Min

Bank of America keeps tabs on Wall Street’s earnings revisions, and the news so far this summer is good.

BofA’s “Earnings Revision Ratio” measures the number of stocks where analysts’ consensus EPS estimates have risen versus the number of estimates that have fallen.

“Global earnings expectations have been surprisingly resilient despite tighter monetary policy,” BofA quant strategists led by Nigel Tupper wrote Tuesday. August saw fewer earnings downgrades than July, and the bank’s Global Earnings Revision Ratio climbed to 0.89 from 0.73, “driven by an improvement in all regions and almost all global sectors.”

“[T]he direction of earnings seems likely to drive markets in the next six months,” Tupper said. While history suggests earnings expectations typically weaken in the wake of central banks’ tighter monetary policy, “expectations have been surprisingly resilient in this cycle so far. “

— Scott Schnipper and Michael Bloom

Stocks opened little changed on Wednesday. The Dow Jones Industrial Average dipped 42 points, or 0.12%, shortly after the bell. The S&P 500 fell 0.09% and the Nasdaq Composite ticked higher 0.01%.

— Sarah Min

Here are some of the biggest stocks making headlines in the premarket:

Nordstrom — Shares dropped 13% after the luxury department store chain cut its full year outlook, despite reporting earnings that beat on profit and revenue expectations.

Bed Bath & Beyond — Shares surged 33% following a Wall Street Journal report, citing people familiar with the matter, said that the beleaguered retailer has found a financing source to shore up its liquidity.

Advance Auto Parts — The stock fell 5.9% after Advanced Auto Parts reported disappointing earnings results and lowered its outlook, citing higher inflation and fuel costs.

Brinker International — Brinker International, the parent company behind restaurant franchises Chili’s and Maggiano’s, dropped 7.3% after reporting an earnings miss and a weaker-than-expected full-year outlook.

Check out more premarket movers here.

— Sarah Min, Peter Schacknow

Raymond James downgraded shares of Medtronic to market perform on Wednesday. The firm cited deteriorating confidence in the medical device maker’s growth potential among the reasons for the outlook shift.

The downgrade comes after the company beat analysts’ estimates in the recent quarter but showed revenue decline year over year as it grapples with supply chain issues.

CNBC Pro subscribers can check out the full story here.

— Samantha Subin

Mortgage loan demand decreased again last week, but there were some signs that the sharp drop in the housing market is finding a floor.

Government mortgage applications actually rose 4% last week, according to the Mortgage Bankers Association, showing some strength among first time homebuyers even though mortgage rates ticked higher.

On the corporate front, shares of Toll Brothers dipped 2.6% in premarket trading after third-quarter home sales came in below expectations and the homebuilder lowered full-year guidance. But the company’s CEO did say that there have been “signs of increased demand” in August.

Pending home sales data is due out at 10 a.m.

— Jesse Pound

The market will likely find some stability after Fed Chairman Jerome Powell delivers his remarks Friday in Jackson Hole, Wyoming, Wells Fargo’s Christopher Harvey said in a note Wednesday.

“Fed fears are expected to crest and one (possibly both) of the recent rate drivers eases. Until then, interest rate trends and liquidity suggest a bit more ‘chop,'” he said.

The market rallied after hitting a mid-June low, but has recently struggled on renewed fears that the Fed will have to continue raising rates for longer than expected.

“In our view, the Jackson Hole takeaway will be in the eye of the beholder: Hawks will focus on hawkish statements (and vice-versa for doves),” Harvey said.

—Fred Imbert

Morgan Stanley believes now is the time to buy shares of Frontier.

Analyst Ravi Shanker resumed coverage of the budget airline with an overweight rating, calling the company a “quintessential” ultra-low-cost carrier now that its failed merger with Spirit is behind it.

CNBC Pro subscribers can read the full story here.

— Samantha Subin

BTIG chief market technician Jonathan Krinsky said the market “continues to be in a tug of war between economic data and what the Fed might potentially do.”

Recent economic data has been weaker than expected “which is causing a bid to bonds and the perception that Powell might be ‘less hawkish’ at Jackson Hole,” Krinsky noted. “That could be enough to keep equities bid … but it’s not necessarily a ‘bullish’ scenario medium-term if eco data continues to weaken.”

—Fred Imbert

European markets were muted on Wednesday as new hawkish comments from a U.S. Federal Reserve policymaker kept investors hesitant.

The pan-European Stoxx 600 index was flat in early trade, with telecoms shedding 0.5% while household goods gained 0.2%.

– Elliot Smith

Morgan Stanley says tech supply chains are about to experience growth in the next big thing: smart tech features — from EV batteries to chips and self-driving tech.

The investment bank named its top stock picks that’s set to benefit from this trend.

Pro subscribers can read the story here.

— Weizhen Tan

Federal Reserve bank of Minneapolis President Neel Kashkari says his biggest fear is that markets are underestimating how high inflation will go or how persistent it would be, adding that the Fed might need to be more aggressive than anticipated.

“The big fear I have at the back of my mind is if we’re wrong and markets are wrong, and that this inflation is much more embedded at a much higher level than we appreciate or markets appreciate,” he said, commenting on market expectations of inflation coming back down to 2% within the next two years.

“Then we’re going to have to be more aggressive than I anticipate, probably for longer, to bring inflation back down,” he said, speaking at an event at the University of Pennsylvania.

Kashkari also pointed towards supply-side shocks driving “half to two-thirds” of the nation’s high inflation.

“The more help we get from the supply side, the less the Fed has to do, and the better we’re able to avoid a hard landing,” he said. He did add, however, there’s some evidence that supply chains are beginning to normalize.

Kashkari is already considered the most hawkish of the U.S. central bank’s 19 policymakers, and expects the Fed to need to lift its policy rate — now at a target range of 2.25% to 2.5% — another two full percentage points by the end of next year.

–Jihye Lee

The energy sector has been a big winner in this year’s volatile stock market.

But one stock still stands out for its “strongest balance sheet,” according to Citi. It also delivered a set of second-quarter earnings that handily beat its major listed peers.

Pro subscribers can read the story here.

— Zavier Ong

Many are expecting hawkish talk from Fed officials later this week, which could spark a sell-off in risk assets. Some fear that the central bank’s continuous and aggressive tightening will tip a slowing economy into a recession.

“I fully expect Fed Chair Jay Powell and other Fed officials to remain hawkish,” said Invesco chief global market strategist Kristina Hooper, in an e-mail. “Aggressive rhetoric would be very likely to send stocks down globally in the near term, as markets are walking on eggshells, so asset owners should be prepared for short-term volatility.”

— Yun Li

Shares of Nordstrom dropped more than 13% in extended trading after the company slashed its financial forecast for the full year. Nordstrom said it’s challenged by excess inventory as well as a slowdown in demand.

“Customer traffic and demand decelerated significantly beginning in late June, predominantly at Nordstrom Rack,” CEO Erik Nordstrom said in a press release.

The company did report fiscal second-quarter earnings and sales ahead of analysts’ estimates, however.

— Yun Li