Trump renewing his threat to escalate the trade war was all the market needed to take a plunge right out the gate … continuing all day for the Dow to close down 102 points.  Also hampering optimism were bad reports from Home Depot and Kohl’s, both cutting their 2019 sales and profit forecasts.  Still investors are left clinging to the consumer as the hope for the economy and will be sharply focused on whether spending will continue in Q4. The good news is that most economists have predicted a lucrative holiday season to top off the year.  Q3 reports from majors Lowe’s, Target and Nordstom are due later this week as well as the Fed minutes due Wednesday.  At 6.7 billion, volume was below the 4-week average. 

Tue  NOVEMBER 19, 2019 / 4:39 pm

Retail sector weighs on Wall Street; Dow and S&P end lower

Sinéad Carew

DJ:  28,036.22  +31.33        NAS:  8,549.94  +9.11         S&P:  3,122.03  +1.57       11/18

DJ:  27,934.02  -102.20       NAS:  8,570.66  +20.72       S&P:  3,120.18  -1.85        11/19

NEW YORK (Reuters) - The Dow Jones Industrial Average .DJI and the S&P 500 .SPX fell from record levels on Tuesday as dour forecasts from retailers Home Depot and Kohl's fueled worries about consumer spending and the U.S.-China trade dispute dragged on.  U.S. President Donald Trump on Tuesday threatened to escalate the trade war by raising tariffs on Chinese imports if no deal is reached with Beijing. 

Home Depot Inc (HD.N) fell 5.4% and was the top drag on the benchmark S&P 500 and the blue-chip Dow after the No.1 U.S. home improvement chain cut its 2019 sales forecast for the second time this year.  Also, department store operator Kohl’s Corp (KSS.N) slumped 19.5% after slashing its annual profit forecast and missing quarterly comparable sales and earnings estimates. 

Expectations of a U.S.-China trade deal and a largely better-than-expected third-quarter corporate earnings season had fueled an equities rally in recent weeks that helped all three indexes set record highs. Nasdaq barely extended its record on Tuesday with a 0.24% gain.   “The market wants to move up but there’s too much gravel in the path,” said Brad McMillan, chief investment officer for Commonwealth Financial Network, an independent broker-dealer in Waltham, Mass.  The weak retailer forecasts came as investors are laser focused on consumer spending as the key to U.S. economic growth.  “Is the consumer really going to show up in the fourth quarter? I’m less convinced than I was in a couple of weeks ago,” said McMillan.

Public hearings for the impeachment inquiry against Trump, also added to uncertainty, the money manager said. On Tuesday a White House official said the president’s request that Ukraine investigate a domestic political rival was an improper “demand,” and he fended off Republican efforts to cast doubt on his competence and loyalty to the United States.  “We continue to see the news come out against the president and from a market perspective that’s a negative. On a slow day its not going to make people feel good,” said McMillan.

The Dow Jones Industrial Average .DJI fell 102.2 points, or 0.36%, to 27,934.02, the S&P 500 .SPX lost 1.85 points, or 0.06%, to 3,120.18 and the Nasdaq Composite .IXIC added 20.72 points, or 0.24%, to 8,570.66.  Seven of the 11 major S&P 500 sectors fell, with the consumer discretionary index’s .SPLRCD 0.97% drop weighing most. The S&P 500 retail index .SPXRT fell 1.24%.  The energy sector .SPNY was the S&P’s biggest percentage loser with a 1.5% drop as oil prices fell on concerns about excess global supply and the demand outlook due to a lack of progress in the U.S.-China trade dispute. 

Investors will be watching for earnings reports from other retailers, including Lowe’s Cos Inc (LOW.N), Target Corp (TGT.N) and Nordstrom Inc (JWN.N) later this week.  They will also look for more details on the Fed’s monetary policy stance from Wednesday’s release of the central bank’s minutes from the latest policy meeting, in which it cut interest rates for the third time this year but signaled it may be done with rate easing for now.

Declining issues outnumbered advancing ones on the NYSE by a 1.04-to-1 ratio; on Nasdaq, a 1.46-to-1 ratio favored advancers.  The S&P 500 posted 41 new 52-week highs and two new lows; the Nasdaq Composite recorded 109 new highs and 109 new lows.

Volume on U.S. exchanges was 6.70 billion shares compared with the average of 6.94 billion for the last 20 sessions.