Stocks Slide At Open: Home Depot Slumps; Tesla Price Target Slashed – Investor's Business Daily

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Stocks opened lower Tuesday as a gathering of early negatives pressured opening trade. Home Depot (HD) dragged on the Dow industrials and the S&P 500 following a Q1 revenue miss. Tesla (TSLA) traded near the bottom of the Nasdaq 100 after an analyst price target cut. April retail sales were a bit softer than expected, and the 10-year Treasury bond yield ticked back above 3%.

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The Dow Jones industrial average and S&P 500 each dumped 0.7% at the starting bell. The Nasdaq Composite skidded 0.9% lower,  with Tesla and Vodafone (VOD) leading the decline.

Tuesday’s early stock market action turned lower after a slightly weak reading on April retail sales from the Commerce Department. April sales rose 0.3%, half of March’s 0.6% gain, but in line with consensus estimates. Sales minus automobiles grew 0.3%, below the 0.5% target.

New York region factories picked up their pace in May, according to the New York Federal Reserve’s Empire State Manufacturing Survey. The survey tallied a reading of 20.1 for the month, up sharply from April’s 15.8 performance, confounding expectations for a downtick to 15.5. The numbers reflect the higher percentage of positive response rates from a survey of 200 manufacturing executives.

New orders jumped, the report said, while employment improved and workweeks grew longer. Input prices flashed a warning on the inflation side, as the “prices paid index” rose to its highest level in several years.

The May builder’s confidence index and March business inventories estimates from the Commerce Department are due out at 10 a.m. ET.

Federal Reserve commentary also continues. Dallas Federal Reserve Bank President Robert Kaplan was scheduled to speak at 8 a.m. ET in New York. San Francisco Federal Reserve President John Williams speaks just after 1 p.m. ET in Minneapolis.

Crude oil jumped, with U.S. benchmark West Texas Intermediate up 0.7% and Europe’s Brent crude up 1.1% to a 3-1/2-year high. Exxon Mobil (XOM) and Chevron (CVX) were the Dow’s only two advancing issues, each up 0.3%. The American Petroleum Institute releases its Weekly Statistical Bulletin on oil inventories after today’s close, ahead of Wednesday’s weekly inventories report from the Energy Information Administration.

Bonds lost ground as investors waited on the retail sales, manufacturing and home building reports. The 10-year Treasury yield ticked 3 basis points higher to flirt with new highs above 3%.

Home Depot Lags On Dow; Tesla Slumps On Restructuring, Price Target Cut

At the low end of the Dow, Home Depot and Caterpillar (CAT) notched the heaviest premarket losses. Home Depot opened 2.1% lower as its first-quarter results were mixed. Earnings squeaked past analyst estimates, but revenue didn’t. The stock has been climbing the right side of a three-month cup base.

On the Nasdaq, Tesla downshifted 3.2% after Morgan Stanley slashed its price target on the stock by more than 20%, to 291. Investors also continued to digest Monday’s news from Chief Executive Elon Musk that the company planned to “flatten” its management structure. A memo from Musk announced a “thorough reorganization,” aimed at improving communication and creating efficiencies.  Tesla shares were down more than 6% so far for the week, and 22% off their March high, after cutting below their 50-day moving average in weak trade Monday.

China Lodging Breaks Out On Q1 Results; Vipshop Takes A Steep Dive

China-based names veered in opposing directions following earnings reports. Vipshop Holdings (VIPS) cratered 19%. China Lodging Group (HTHT) surged nearly 5%.

IBD 50 name China Lodging also beat on first-quarter revenue and second-quarter revenue guidance. But a 79% gain in earnings per share stopped well short of estimates. The strong-volume gain lifted shares above a 161 buy point in a late-stage, double-bottom base.

Vipshop reported stronger-than-forecast first-quarter revenue, and second-quarter revenue guidance that was above expectations. First-quarter earnings per share came up a penny short, however, sending the online discount retailer into a dive. The stock had been attempting to build a floor in a three-month consolidation.

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