By Peter Nurse
Investing.com -- U.S. stocks are seen opening lower Wednesday, handing back some of the previous session’s gains after disappointing quarterly results from retail giants Target (NYSE: TGT ) and Lowe’s (NYSE: LOW ).
The main equity indices closed higher on Wall Street Tuesday, boosted by a strong retail sales report for April, suggesting consumers are successfully weathering the sharp rise in inflation so far, good news for retailers which are reporting earnings this week.
This week is a significant one for the retail sector, with Walmart (NYSE: WMT ) reporting disappointing earnings on Tuesday, hit by rising costs, while Home Depot (NYSE: HD ) sales rose to record levels and it raised its 2022 guidance.
The earnings reports continued Wednesday, with Target’s first quarter profit halved and it warned of a bigger margin hit due to rising fuel and freight costs. Home improvement chain Lowe’s also reported a bigger-than-expected drop in same-store sales, as demand eased for its tools and building materials from pandemic highs.
Elsewhere, Netflix (NASDAQ: NFLX ) will be in focus after the streaming giant announced it has laid off about 150 people, approximately 2% of the company's workforce in the United States and Canada, as it faces slowing growth.
U.S. Federal Reserve chief Jerome Powell pledged on Tuesday that the U.S. central bank would lift interest rates as high as needed to kill the surge in inflation.
The Fed raised interest rates by 50 basis points earlier this month, its second increase of 2022, and the central bank is widely expected to hike by the same amount when it meets again next month.
Oil prices traded higher Wednesday on hopes that China is finally getting to grips with a prolonged COVID-19 outbreak, potentially increasing demand from the world’s largest importer of crude.
Shanghai, China’s main financial hub, achieved its milestone of three consecutive days with no new COVID-19 cases outside quarantine zones on Tuesday and laid out plans to end a more than six-week lockdown.
U.S. crude oil inventories unexpectedly fell by 2.4 million barrels for the week ended May 17, according to data from the industry body American Petroleum Institute .
Investors now await crude oil supply data from the U.S. Energy Information Administration , due later in the day, for confirmation.
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