Stock market struggles for direction as retail shares weigh

U.S. stocks were flat to slightly higher on Wednesday as robust gains for financial shares partially offset weakness in transportation and retail shares.

Retail shares have suffered in recent weeks following reports of tepid holiday sales. On Wednesday, Target Target Corp.

TGT, -5.00%

 warned that its fourth-quarter earnings would be weaker than previously anticipated, sparking a selloff in its shares which spread throughout the sector. Dow component Wal-Mart Stores Inc. fell in sympathy with Target.

J.C. Penney Co. Inc.

JCP, -2.23%

 and Kohls Corp.

KSS, -3.12%

 shares sank after Credit Suisse downgraded both stocks.

“The story coming out of retail hasn’t been good,” said Mohannad Aama, managing director at Beam Capital Asset Management, adding that “individual stories” will likely continue to influence the broader sector.

But shares of the largest U.S. banks rallied after Goldman Sachs Group reported stronger-than-expected quarterly earnings. Financial stocks led a torrid postelection rally that took the Dow within a hair’s breadth of the 20,000 milestone. But they’ve stalled over the past week as investors opted to wait for more details about President-elect Donald Trump’s policies.

Shares of Morgan Stanley

MS, +1.65%

 and Bank of America Merrill Lynch

BAC, +1.75%

 notched strong gains.

Meanwhile, Citigroup Inc.

C, -1.15%

 reported quarterly revenues that were slightly weaker than expected, sending its shares modestly lower.

The Dow Jones Industrial Average

DJIA, -0.14%

shed 4 points, or less than 0.1%, to 19,820, while the SP 500 index

SPX, -0.04%

rose 2 points, or 0.1%, to 2,269. The Nasdaq Composite Index

COMP, +0.04%

gained 11 points, or 0.2%, to 5,549.

Mike Antonelli, an equity sales trader at R.W. Baird Co., said global stocks would likely remain placid until investors have a better picture of the fourth-quarter earnings environment and companies’ outlooks for 2017, as well as Trump’s plans.

The bulk of SP 500 firms will release their earnings in the coming weeks.

“We’re just coasting off of 2016 right now. With the lack of wind in our sails we’ve slowed down a bit,” Antonelli said.

Healthy consumer-sentiment readings have helped constrain the stock-market rally, Antonelli said.

“It’s hard for the market to go higher when everybody is already bullish,” Antonelli said.

Transportation shares also weakened after CSX Corp.

CSX, -2.68%

a railroad operator, posted disappointing quarterly earnings.

U.S. stocks retreated Tuesday as the market turned its attention to comments from President-elect Donald Trump, who said a strong dollar is harming the U.S. economy. The Dow finished 0.3% lower at 19,826.77, the SP 500 fell 0.3% to 2,267.89 and the Nasdaq lost 0.6% to 5,538.73.

Trump also criticized the North Atlantic Treaty Organization and warned that the U.S.’s one-China policy, a diplomatic protocol that has been in place since the 1970s, could be up for negotiation.

The Trump comments took a toll on the greenback, which was recovering some ground Wednesday. The WSJ Dollar Index

BUXX, +0.31%

 rose 0.5% to 91.37, from 91.16 late the prior session. The index fell 1.1% Tuesday.

Read: Trump is waving adios to the longstanding ‘strong-dollar policy’

Economic docket: The consumer-price index, a widely watched gauge of inflationary pressure, showed price growth accelerated in 2016 at the fastest pace since 2011.

In December, the index rose 0.3%. Excluding the volatile food and energy categories, prices rose 0.2%. The reading was in line with investor expectations and had little impact on stock futures.

U.S. industrial output accelerated last month at its strongest pace in two years.

The National Association of Homebuilders’s housing market index showed that builder sentiment slipped in January after notching its highest reading of the business cycle in December. Despite the drop, the January number was the second-highest reading of the cycle.

Investors will also be watching a speech from Yellen on the goals of monetary policy, due at 3 p.m. Eastern Time. Ahead of that, Minneapolis Fed President Neel Kashkari will make an economy-themed speech at 11 a.m. Eastern.

Read: How long postelection rallies last after Inauguration Day—in one chart

Stocks to watch: Netflix Inc.

NFLX, -0.93%

will report after the close.

Read: What to expect from Netflix earnings

Shares of Cameco Corp.

CCJ, -13.26%

 fell 11% after the uranium miner said it would cut 10% of its workforce and warned on earnings due to a continued weak market.

Apollo Global Management LLC

APO, +0.19%

is prepping Chuck E. Cheese for an initial public offering that values the restaurant chain at more than $1 billion, Reuters reported.

Qualcomm Inc.

QCOM, +1.57%

 shares rebounded Wednesday after the Federal Trade Commission filed a monopoly complaint against the chip maker, spurring a 4% drop on Tuesday. See: Qualcomm licensing business, Apple deal attacked in FTC’s antitrust lawsuit

Barron’s Bounce: Revlon, Peabody Energy

(3:58)

Stories in Barron’s Magazine sent the makeup stock up 7% and the troubled coal miner down 18%. Emily Bary and Jack Hough discuss.

Other markets: European markets

SXXP, -0.05%

 traded mixed. The FTSE 100 index

UKX, +0.21%

was modestly higher, after logging its worst loss in six months on Tuesday after Prime Minister Theresa May confirmed the U.K. will exit the European Union’s single market.

The British pound

GBPUSD, -0.6203%

 moved lower against the dollar, trading at $1.2316 from $1.2414 late Tuesday.

See: ‘Textbook short squeeze’ for the pound—analysts assess May’s Brexit plans

Asian stocks

ADOW, +0.60%

 finished mostly higher, with the Nikkei 225 index

NIK, +0.43%

rising 0.4%, lifted by a stronger Japanese yen.  

Oil prices

CLH7, -1.78%

lost a grip on earlier gains and fell nearly 2%, while gold

GCG7, +0.23%

 was largely unchanged after settling at a two-month high Tuesday on Trump and Brexit jitters.

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