Stocks rebounded from Monday’s declines as a temporary exemption to a blacklist against China’s Huawei Technologies helped ignite confidence among investors.
Late Monday, the Commerce Department announced it would be issuing a temporary license for some U.S. companies to continue working with Huawei and its affiliates, effective immediately and lasting 90 days.
“The Temporary General License grants operators time to make other arrangements and the Department space to determine the appropriate long term measures for Americans and foreign telecommunications providers that currently rely on Huawei equipment for critical services,” Secretary of Commerce Wilbur Ross said in a statement. “In short, this license will allow operations to continue for existing Huawei mobile phone users and rural broadband networks.”
This comes after President Donald Trump last week signed an executive order forbidding U.S. companies from doing business with tech and telecom companies deemed to pose a national security threat.
The Commerce Department had subsequently placed Huawei on its Entity List after concluding the company’s activities were “contrary to U.S. national security or foreign policy interests.” Huawei has denied the Trump administration’s claims that the company’s equipment could be used to spy for the Chinese government.
But the Commerce Department’s latest move mitigates some of the immediate disruption to customers and suppliers the ban threatened to impose. Huawei has said its blacklisting would force U.S. customers into taking up “inferior yet more expensive alternatives, leaving the U.S. lagging behind in 5G deployment.” Semiconductor stocks – many of which serve as suppliers for the Chinese tech giant – had broadly declined last week following the announcement.
Home Depot (HD) reported fiscal-first quarter earnings results that beat consensus expectations, but closely watched comparable same-store sales missed estimates as unfavorable weather and deflation in lumber prices dampened results. Adjusted earnings were $2.27 per share in the first quarter, higher than the $2.18 expected, while revenue of $26.4 billion matched expectations. Comparable same-store sales were 2.5% overall, lower than the 4.3% expected, while U.S. same-store sales rose 3%.
Kohl’s (KSS) shares sank in early trading after the company missed Wall Street’s expectations for first-quarter results and cut its guidance for the full year. Adjusted earnings of 61 cents per share fell short of estimates by 6 cents, while sales of $3.82 billion were $110 million lower-than-expected. Comparable same-store sales dropped 3.4% in the quarter, sharply below the 0.1% decline expected. Kohl’s said it now expects to earn between $5.15 and $5.45 per share on an adjusted basis, versus the $5.80 to $6.15 per share it saw previously.
Tesla (TSLA) shares sank Tuesday morning after Morgan Stanley analyst Adam Jonas slashed his bear-case price target on the company to $10, from $97 previously, citing a “risk of contagion to fundamentals” driven largely by a deceleration in demand. Jonas’ base-case price target is $230, and he rates Tesla’s stock as Equal-weight. Shares of Tesla have dropped 38% for the year-to-date.
Existing home sales unexpectedly declined in April, extending declines from March, according to a report Tuesday from the National Association of Realtors (NAR). Sales of existing properties fell 0.4% for the month to a seasonally adjusted rate of 5.19 million, from 5.21 million in March. Consensus economists had anticipated an increase of 2.7% in existing home sales for April, according to Bloomberg data.
Despite the drop in April’s sales, NAR’s chief economist Lawrence Yun said he expects moderate growth in home sales in the near-term.
“We are seeing historically low mortgage rates combined with pent-up demand to buy, so buyers will look to take advantage of these conditions,” he said. “Also, job creation is improving, causing wage growth to align with home price growth, which helps affordability and will help spur more home sales.”
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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