US open: Stocks fall as Target and Lowe's disappoint
By Benjamin Chiou
Date: Wednesday 21 May 2025
(Sharecast News) - US stocks opened Wednesday's session firmly in the red on the back of another rise in bond yields, while earnings from economic bellwethers Target and Lowe's disappointed.
By 1015 ET, the Dow was down 0.8%, the S&P 500 was falling 0.5% while the Nasdaq had slipped 0.3%. The S&P 500 and Nasdaq were retreating for the second day after both indices hit their highest levels in three months on Monday.
Government bonds weakened again early on, with the yield on a 10-year US Treasury up 3.9% at 4.53%, having touched a high of 4.551% before Wall Street opened - its highest mark since mid-February.
"Stocks are off on Wednesday, as rising global bond yields weigh on risk sentiment, however, the losses are small so far," said Kathleen Brooks, research director at XTB.
However, Brooks pointed to elevated yields being a risk factor later this year. While a reduction in volatility has propped up stock markets over recent weeks, a bond market crisis is "exactly the sort of event that could send stocks tumbling and volatility surging", she said.
Also weighing on sentiment were geopolitical fears: there were concerns of an escalation of conflict in the Middle East on reports that Israel is looking to attack Iran's nuclear sites, while hopes for a ceasefire between Ukraine and Russia remain up in the air.
The only major economic data release of the day was from the Mortgage Bankers Association, which reported that mortgage applications in the US slumped last week as the average long-term mortgage rate hit its highest in three months. The MBA's Market Composite Index showed that applications fell 5.1% in the week ended 16 May, following a 1.1% increase the previous month, making the first decline in three weeks.
Market movers
Target fell sharply after cutting its full-year guidance on Wednesday as the US retail giant missed first-quarter forecasts. The big box retailer said net sales fell 2.8% in three months to 3 May to $23.85bn, below the $24.27bn Wall Street was expecting.
Brian Cornell, chief executive, said the trading environment during the first quarter had been "highly challenging". He blamed Target's performance on weakened consumer sentiment and the impact of Donald Trump's tariff regime.
DIY retailer Lowe's managed to beat profit expectations, but that didn't stop the stock from falling early on, with same-store sales down 1.7% in the first quarter. First-quarter revenues totalled $20.93bn, coming in slightly shy of the $20.97bn expected.
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