Major US stock indices fell moderately, interrupting the three-day rally, as the decline in financial companies outweighed the solid growth in shares of the retailer Home Depot (HD).

Shares of major US banks such as Citigroup (C), Bank of America (BAC) and J.P. Morgan Chase (JPM) fell in price amid falling treasury yields. Yields on 10-year bonds fell 5 basis points to 1.55%.

Home Depot reported a quarterly profit of $ 3.17 per share, which was higher than the average forecast of analysts at $ 3.08. However, the company's revenue was slightly below forecasts. In addition, comparable sales increased by 3% compared to analysts forecast + 3.5%. Home Depot said its sales were affected by lower sawnwood prices, and it lowered its full-year sales forecast, noting that tariffs could affect US consumer spending. However, HD stock prices jumped 4.63%.

Investors look forward to the publication of the minutes of the July meeting of the Federal Reserve System (FRS) on Wednesday, as well as statements by Fed Chairman Jerome Powell on Friday at the annual conference of central banks in Jackson Hole (Wyoming). Powell's comments will be closely monitored for tips on whether to expect further easing of the policy amid the ongoing trade war with China and growing fears of an impending recession, signaled by an inversion of the US bond yield curve last week.

Most DOW components recorded a decrease (25 out of 30). Outsiders were shares of Dow Inc. (DOW, -5.39%). The biggest gainers were Home Depot Inc. (HD, + 4.63%).

Almost all S&P sectors completed trading in the red. The largest decline was shown by the financial sector (-0.8%). Only the conglomerate sector grew (+ 0.8%).

At the time of closing:

Dow 25,962.44 -173.35 -0.66%

S&P 500 2,900.51 -23.14 -0.79%

Nasdaq 100 7,948.56 -54.25 -0.68%

Mazen Issa, the senior FX strategist at TD Securities, suggests that, as the markets await key Fed events in the minutes and the symposium this week, the broad USD is off to a firm start and it comes against a backdrop of suppressed U.S. Treasury (and global) bond yields.

• “We think this firmness can continue, at the very least on a tactical basis as we think the Fed will not be able to bridge the gap between aggressive easing priced into the curve and the Fed's definition of a "mid-cycle adjustment". As such, we see a risk that US yields adjust temporarily and tactically higher in the short-term in the coming days (a dynamic which we think will be met with inevitable demand).
• We do not expect the USD to be immune to this adjustment and perhaps more durably than the rates market. There are some signs that the recent bid in the USD may persist for a while longer. For one, even with the rally in US 10s in recent weeks, the USD still remains the only game in town as far as carry is concerned (in the G10).
• Dethroning this status will be very difficult to do without a return to aggressive balance sheet expansion we think. Here, the ECB is just much further ahead in this process. Taken in conjunction with US data surprises moving in the USD's favor only serves to reinforce its its allure (although still healthily stable on a y/y trade-weighted basis).
• Further to this, option markets are pricing in a modest premium in USD calls, and, after leading the move lower against the USD earlier this summer (but in line with the move in US10s), both the EUR and JPY have begun to diverge from the recent drop in 10yr yields. This suggests to us that the market requires a fresh catalyst to compel upside in these currencies vs. the USD, neither of which - with some caveats in the JPY - is compelling at the moment.”

U.S. stock-index futures traded little-changed on Tuesday as investors paused after a three-day rally, which was triggered by hopes that major economies would act to counter a global economic slowdown.

Global Stocks:

(company / ticker / price / change ($/%) / volume)

Walt Disney (DIS) target lowered to $140 from $147 at Imperial Capital

DuPont (DD) target lowered to $77 from $83 at Cowen

HP (HPQ) downgraded to Neutral from Buy at Citigroup; target lowered to $21

AT&T (T) removed from BofA/Merrill's US 1 List 

Kohl's (KSS) reported Q2 FY 2019 earnings of $1.55 per share (versus $1.76 in Q2 FY 2018), beating analysts’ consensus estimate of $1.53.

The company’s quarterly revenues amounted to $4.430 bln (-3.1% y/y), beating analysts’ consensus estimate of $4.248 bln.

The company reaffirmed guidance for FY 2019, projecting EPS of $5.15-5.45 versus analysts’ consensus estimate of $5.22.

KSS rose to $50.20 (+4.15%) in pre-market trading.

Home Depot (HD) reported Q2 FY 2019 earnings of $3.17 per share (versus $3.05 in Q2 FY 2018), beating analysts’ consensus estimate of $3.08.

The company’s quarterly revenues amounted to $30.839 bln (+1.2% y/y), generally in line with analysts’ consensus estimate of $30.984 bln.

The company also issued guidance for FY 2019, projecting EPS of +3.1% y/y to ~$10.34 (versus analysts’ consensus estimate of $10.10) and revenues of +2.3% y/y to ~$110.7 bln (versus analysts’ consensus estimate of $111.18 bln).

HD rose to $212.00 (+1.95%) in pre-market trading.