An earnings guidance upgrade and better than expected third-quarter sales gains from home improvement retailer Home Depot failed to impress investors on Tuesday.
Shares in the Atlanta-based company fell 2.6 per cent to $124.40, taking its losses this week to 4.3 per cent amid concerns over the outlook for the US housing market.
Home Depot said like-for-like sales — a key industry metric — rose 5.5 per cent for the three months to end of October, a pick-up from the 4.7 per cent pace notched in the second quarter and better than the 4.4 per cent growth that had been anticipated by analysts.
It also nudged up its guidance for full-year diluted earnings per share to growth of 15.9 per cent to $6.33.
But the solid performance appeared to be overshadowed by last week’s rise in bond yields. Expectations that president-elect Donald Trump’s plans for a major fiscal stimulus would drive up inflation and long-term interest rates prompted the yield on the 10-year Treasury note to jump 37 basis points last week.
Mortgage rates have followed with the average rate on the 30-year fixed mortgage hitting the psychologically important barrier of 4 per cent on Monday, according to MortgageNewsDaily.com.
A sustained rise in borrowing costs is fuelling fears in the market that this could put off first-time buyers, many of whom are already having to contend with high house prices in the country’s big cities.
Elsewhere, TJX Cos shares were in retreat after the off-price retailer behind department stores like TJ Maxx and Marshalls cautioned its earnings in the final quarter of the year will be held back by wage increases and the strength of the dollar.
Although its sales performance in the third quarter beat expectations as it attracted more shoppers through the doors of its outlets, the company warned wage pressure would hurt earnings per share in the fourth quarter by about 3 per cent.
It said earnings per share are expected to dip to 96-98 cents in the final three months of the year from 99 cents a year ago.
TJX tweaked its full-year guidance in its latest trading update, forecasting earnings per share of between $3.39 and $3.41 and adjusted earnings per share of $3.46 to $3.48, versus previous guidance of $3.39 to $3.43.
Shares in the group, up more than 15 per cent over the past 12 months, fell 1 per cent to $73.49.
In the wider market, US stocks made ground on Tuesday as the rally following Mr Trump’s presidential election victory last week regained some of its momentum.
The Dow Jones Industrial Average, which has ended higher for the past six sessions — three of which saw the index hit record highs — rose a further 0.3 per cent to 18,923.1. The S&P 500 was up 0.8 per cent at 2,180.4 while the Nasdaq Composite rose 1.1 per cent to 5,275.6.
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