Wall Street flat with retail earnings, data pouring in

TOKYO -- U.S. futures shifted between small gains and losses early Wednesday morning after Target issued a lackluster profit report, while investors awaited the U.S. government's latest retail sales data.

Futures for the Dow Jones and S&P 500 were essentially unchanged one hour before the opening bell.

Shares of Target Corp. slid 14% in premarket trading, dragging down other major retailers as well. Target reported an unexpected and potentially ominous pullback in customer spending ahead of the holiday shopping season, pushing third-quarter profits down 52% after it was forced to slash prices for Americans squeezed by decades-high inflation.

Macy’s and Kohl’s fell 3% to 5%. Even Walmart, which topped profit expectations and raised it expectations for the year when it posted quarterly earnings Tuesday, fell 2%.

The Commerce Department will report retail sales data for October before the market opens, with economists surveyed by FactSet expecting a month-over-month sales increase of 0.9% from September to October.

In Europe at midday, France's CAC 40 fell 0.5%, while Germany's DAX tumbled 1% and Britain's FTSE 100 inched down 0.1%.

Japan's benchmark Nikkei 225 rose 0.1% to finish at 28,028.30. Australia's S&P/ASX 200 slipped 0.3% to 7,122.20. South Korea's Kospi shed 0.1% to 2,477.45. Hong Kong's Hang Seng fell 0.5% to 18,256.48, while the Shanghai Composite dipped 0.5% to 3,119.98.

“Asian equities were defensive on Wednesday, with geopolitical tensions driving price action,” said Anderson Alves at ActivTrades.

Those tensions appear to have receded slightly after NATO member Poland and the head of the Military alliance both said Wednesday there is “no indication” that a missile that came down in Polish farmland, killing two people, was an intentional attack. Air defenses in neighboring Ukraine likely launched the Soviet-era projectile to fend off a Russian assault that savaged its power grid, they said.

“There is nothing, absolutely nothing, to suggest that it was an intentional attack on Poland," said Polish President Andrzej Duda.

Treasury yields eased on hopes a slowdown in inflation could mean the Federal Reserve’s bitter, economy-crunching medicine for it could taper off as well.

“Inflation is still top of mind and market moving,” said Nate Thooft, senior portfolio manager at Manulife Investment Management. “Anything that potentially swings the inflation story, the market is keen to react.”

Such sharp swings for stocks have almost become the norm on Wall Street this year, as high inflation and interest-rate hikes by the Federal Reserve have heightened fears and triggered knee-jerk reactions. “The market remains adrift looking for a good narrative that will stick but seemingly not finding it,” Thooft said.

Traders have been paring their bets for how big a hike the Fed will announce at its next policy meeting in December.

The Fed has already hiked its key overnight rate up to a range of 3.75% to 4% from virtually zero earlier this year. It plans more, but the hope for markets is that improvements in inflation data could mean the Fed holds rates at a level that’s not as punishing for Wall Street.

Prices for crude oil fell back after jumping the day before. A worsening war in Ukraine could cause spikes in prices for oil, gas and other commodities that the region produces.

In energy trading, benchmark U.S. crude fell 22 cents to $86.70 a barrel. Brent crude, the international standard, was unchanged at $93.67 a barrel.

In currency trading, the U.S. dollar edged up to 139.47 yen from 139.27 yen. The euro cost $1.0418, up from $1.0349.

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Kageyama reported from Tokyo; Ott reported from Washington.