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Dow Jones Today: Retailers Rally — Target Stock Scores Breakout

Stocks rallied into Wednesday's open, as retailers ruled the early upside following earnings reports from Target (TGT), Lowe's (LOW) and Home Depot (HD). The Nasdaq leapt 1.1%, the S&P 500 was ahead 0.9% and the Dow Jones today traded up 1%. The session faces an afternoon hurdle, as President Donald Trump hurled fresh criticism at the Federal Reserve ahead of the release minutes from the Fed's July meeting at 2 p.m. ET.

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Target stock rocketed 15% higher, and Lowe's stock soared 12%, easily leading the S&P 500. The updraft boosted other retailers, sending Nordstrom (JWN) up 1.3%. Dollar Tree (DLTR) posted a 1.8% gain. IBD Leaderboard name Costco (COST) gained 0.7%, trading in a buy zone.

Home Depot reported mixed second-quarter results, opening 0.3% higher on the Dow Jones today. Nike (NKE) and chemical maker Dow (DOW) led early trade on the Dow Jones today, up about 2% each. Tesla (TSLA) shares fell 2% on news that Dow Jones issue Walmart (WMT) was suing the company's solar division over rooftop fires allegedly caused by solar power installations.

Apple (AAPL) surged 1.1% on reports it had invested $6 billion in content ahead of the expected September launch of its Apple TV+ streaming service this fall. Chevron (CVX) popped more than 1%, after BMO Capilat initiated coverage with an outperform rating and a 165 price target.

Chipmakers were under early pressure as Analog Devices (ADI) fell 1.3% and Cree (CREE) toppled 6% following their quarterly reports.

IPOs were active, with China-based Pinduoduo (PDD) spiking 14% on earnings news. Germany's Jumia Technologies (JMIA) skidded almost 13% lower following its second-quarter report.

Gear up for Wednesday's market action by reading IBD's Investing Action Plan.

Trump Critiques Fed Ahead Of Minutes

Investors will inspect today's Fed minutes for clues of Fed officials' opinions in the split vote to cut rates at last month's meeting. Fed Chief Jerome Powell described the disappointing-to-some quarter-point cut as a "mid-cycle adjustment." President Trump pledged his new September round of 10% tariffs on $300 billion in China-made goods several days later.

Trump early Wednesday tweeted a fresh round of criticism at Powell, saying the Fed's rate cut policy is putting the U.S. at a disadvantage relative to countries that have recently lowered their rates. "We should be lower than them. Yesterday, "highest Dollar in U.S.History." No inflation. Wake up Federal Reserve," the President tweeted.

The stock market remains in an uptrend, but that uptrend is under pressure, indicating yellow-flag conditions for investors. That signals appropriate circumstances for buying well-researched stocks breaking out past valid buy points, or adding to positions at follow-on entries. But turnabout days in markets under pressure can be punishing, so keep sell rules handy, tolerances for those sell rules tight, and take profits where feasible.

For more detailed analysis of the current stock market and its status, study the Big Picture.

Target Stock Nails Breakaway Gap

Target's second-quarter report helped launch retailers higher early Wednesday. The sector likely received an added boost from chatter over a possible payroll tax cut initiative from the White House, as well as positive comments on consumer strength Wednesday morning from Bank Of America Chief Executive Brian Moynihan.

Target reported earnings of $1.82 per share, well above views for $1.61. Revenue of $18.42 billion topped the $18.33 billion target among analysts. Same-store-sales jumped 3.4%, while digital-channel sales surged 34%. Management raised the high end of its full-year earnings outlook to well above expectations.

Target stock soared past an 89.61 handle buy point in an 11-month base. The gap up move presented a breakaway gap buying opportunity, beginning at the stock's opening price of 99.87.

Lowe's second-quarter earnings gained 4%, easily above estimates, while revenue held effectively flat — but just above forecasts. Same-store sales rose 3.2%, while full-year earnings guidance met projections, and revenue guidance was above analyst targets. Lowe's shares have been consolidating since April.

Home Depot, Walmart Aproach Buy Points

Home Depot's earnings cleared analysts' hurdles, up 4% to $3.17 a share. A 1% revenue gain, to $30.84 billion, missed views for a 2% increase. The company puts its full-year revenue and earnings just below analyst estimates, but said same-store sales could climb 4%.

Home Depot stock gained 0.9%, to just below a 219.39 buy point in what IBD MarketSmith chart analysis plots as a first-stage flat base.

Walmart ran ahead of other blue chips early Wednesday, after testing support at its 50-day line on Wednesday. Walmart shares were less than 2% below a 115.59 buy point in a five-week flat base.

China IPO Spikes As Users Surge

E-commerce platform provider Pinduoduo swept 11% higher, after reporting a 160% revenue gain and narrowing its per-share loss more than expected in its second quarter. Average monthly active users increased 88%, to 366 million. At Tuesday's closing bell, the stock was 37% above its July 2018 IPO price, and about 24% below a potential 32.09 buy point in a deep cup base.

Europe Rallies; Asia Mixed

Overseas, China's markets edged higher, while Tokyo's Nikkei 225 in Japan slumped 0.3%. Europe's market rallied, led by automakers on a reports of a still-possible merger between Renault and Fiat Chrysler (FCAU). In afternoon tradfe, the FTSE 100 in London and Frankfurt's DAX were up more than 1%. The CAC-40 in Paris seized a 1.7% gain.

Dow Jones Today: A Below Average August

The Dow Jones Industrial Average remains about midway between its 50-day and 200-day moving averages, boxed in that range since Aug. 2. The Nasdaq and S&P 500 are closer to their 50-day lines, finding resistance at that level in multiple attempts to regain support.

August has been a rising month only for the Nasdaq in recent years. The Nasdaq has a 1.2% average gain over the past five Augusts. The S&P 500 has advanced an average of 0.1%. The Dow Jones industrials have, on average, slipped 0.2%.

So far this month, the Dow was down 3.4% through Tuesday. The S&P 500 had slipped 2.7% and the Nasdaq showed a 2.8% decline.

Oil Prices: Breaking Resistance?

Oil prices climbed, tacking toward a second straight weekly advance. West Texas Intermediate jumped 1.6% early, to $57.03 a barrel. Europe's Brent crude benchmark gained 1.3% to $61.35. WTI on Tuesday edged above its 50-day line — which has proven to be a level of upside resistance since May.

Oil prices may see some impact from the Energy Information Administration's official crude inventories report, due out at 10:30 a.m. ET.  Industry data from the American Petroleum Institute late Tuesday showed a 3.45 million-barrel draw on crude supplies and a 400,000-barrel decrease in gasoline inventories during the week. Both numbers indicated sharper-than-expected decreases.

Find Alan R. Elliott on Twitter @IBD_Aelliott

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