Wall Street Is Obsessing Over Comey and Russia, So Stocks Have Logged Two Days In the Red - TheStreet

Wall Street sat in wait of market-moving news out later this week, including a potentially game-changing testimony on the Trump-Russia scandal, the U.K. elections, and possible changes to eurozone monetary policy.

That led to cautious trading on Tuesday, though stocks ultimately closed lower for their second day in a row. The S&P 500 was down 0.28%, the Dow Jones Industrial Average slid 0.22%, and the Nasdaq fell 0.33%.

Market activity should accelerate toward the back half of the week with several catalysts likely to trigger trading. The United Kingdom will hold its general election on Thursday -- Prime Minister Theresa May is still holding a lead in the polls over Labor's Jeremy Corbyn. Also on Thursday, the European Central Bank will announce a decision on monetary policy. Improving economic data in the eurozone could affect members' growth forecasts.

Finally, former FBI director James Comey will deliver his public testimony to the Senate Intelligence Committee on Thursday. Donald Trump fired Comey earlier in May while the FBI was investigating the Trump transition team's ties to Russia. News reports also indicated that Trump had asked Comey for his loyalty and requested he stop investigating former National Security Adviser Michael Flynn.

"Investors are fleeing for safety ahead of [those] three key events later this week," said Lindsey Piegza, chief economist at Stifel Fixed Income. "June 8th is slated to be a very busy day, to say the least."

Wall Street wasn't able to extend a record-breaking streak into a third session on Monday as a terror attack in London and lower oil prices teamed up to take down stocks. Still, stocks held close to records with market reaction to terrorism appearing restrained and cautious. Wall Street largely overlooked weaker-than-expected U.S. jobs growth in May on Friday, with major benchmark indexes closing at records for the second day in a row.

The U.S. economy ended April with 6.044 million job openings, a record high and far higher than an expected 5.725 million, according to a survey from the Bureau of Labor Statistics. March's report was revised to show 5.785 million openings at the end of that month.

Crude oil prices made a surprise turn higher on Tuesday, though the fallout among major Middle Eastern countries continued to be felt. Four countries -- Saudi Arabia, the United Arab Emirates, Bahrain and Egypt -- cut diplomatic ties with Qatar over its alleged ties to terrorism. The Maldives, one of Libya's three rival governments, and Yemen later joined in on the decision. Kuwait is looking to mediate tensions between Saudi Arabia and Qatar.

The move escalates a rumbling dispute between Qatar, its sometime partner Iran, and their regional neighbors. Tensions between the country could erode cooperation among the Organization of Petroleum Exporting Countries. OPEC recently agreed to extend their output cut agreement by nine months to address a global supply imbalance.

Crude held onto gains on Tuesday even after the Energy Information Administration reduced its price forecast for oil. The EIA now anticipates West Texas Intermediate to average $53.61 a barrel over 2018, 2.7% than its former target, though 2017 price forecasts were increased by 0.2% to $50.78. The energy watchdog also lowered its 2018 targets for Brent crude oil. The EIA also nudged its 2018 U.S. production targets higher.

West Texas Intermediate crude oil was up 1.7% to $48.19 a barrel on Tuesday.

You can't expect a real panic to liquidation to begin until oil reaches $43 a barrel, Jim Cramer argued over on our premium site for investors, Real Money. Get his insights with a free trial subscription to Real Money.

Macy's (M) led the retail sector lower after reducing its forecasts for full-year gross margins. Chief financial officer Karen Hoguet said during an investor meeting that its full-year gross margin could fall 60 to 80 basis points from 2016. Second-quarter gross margin will likely be 100 basis points lower than a year earlier.

Michaels (MIK) declined 8% after falling short of profit estimates over its first quarter and guiding for a surprise decline in sales in its second quarter. The crafts retailer earned 38 cents a share in its first quarter, a penny below estimates, while revenue of $1.16 billion came in just short of expectations. For its second quarter, the company anticipates same-store sales to fall 0.5% to 1.5% and profit no higher than 17 cents a share, surprising analysts looking for same-store sales growth of 0.2% and earnings of 19 cents.

Lands' End (LE) slid 8% after posting a wider loss over its first quarter than the year earlier. The retailer reported a loss of $7.8 million, or 24 cents a share, compared to $5.8 million, or 18 cents, in its first quarter last year. Analysts anticipated a per-share loss 2 cents narrower. Revenue also came in below estimates. Same-store sales rose 2.1%.

HD Supply Holdings (HDS) lost nearly one-fifth of its value on Tuesday after a disappointing first quarter. The industrial distributor earned 39 cents a share, 27 cents below targets. The company also announced that it would sell its Waterworks business to Clayton, Dubilier & Rice in a $2.5 billion deal.

Francesca's (FRAN) declined 13% after falling short of quarterly earnings and revenue estimates. Net income of 12 cents a share came in 6 cents lower than the same quarter a year earlier and missed consensus by 2 cents. Sales increased 1% to $107.7 million, but missed estimates by roughly $6 million. Same-store sales fell 5%, far steeper than an anticipated 0.5% drop. For its second quarter, the retailer expects earnings no higher than 18 cents a share, a dime below estimates.

G-III Apparel (GIII) surged more than 15% following a better-than-expected quarter and improved expectations for the year. An adjusted loss of 18 cents a share was narrower than analysts anticipated. Sales grew 16% to $529 million, $31 million above consensus. The owner of Tommy Hilfiger and Calvin Klein said it expects full-year earnings of $1.20 to $1.30, above estimates of $1.01.

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