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FOMC minutes, Target, Lowe's earnings — What to know in markets Wednesday

Heidi Chung
Reporter

Minutes from the Federal Open Market Committee’s (FOMC) October meeting, big box retailer Target (TGT) and home improvement giant Lowe’s (LOW) will take centerstage Wednesday.

Though the minutes from the FOMC’s October policy meeting are unlikely to reveal new information on the central bank’s monetary policy path, it will provide color on the deliberations that resulted in the third consecutive rate cut this year. Furthermore, two voting members dissented the latest rate decision, and investors will be looking for further clues on the split committee.

“The October Fed minutes are mostly old news given the recent testimony from Chair Jerome Powell, but they should still provide a more detailed picture of how broad the support was for signalling an extended pause at the October meeting,” Capital Economics wrote in a note Friday.

Nomura pointed out that the minutes released on Wednesday will likely cover two FOMC meetings during the month — the policy setting meeting October 29-30 and the unscheduled meeting on October 4 when the committee discussed the balance sheet policy adjustments. “For the latter meeting, we expect the discussion to focus on how the Committee’s decision to commence expanding the balance sheet by buying T-bills does not represent a return to crisis-era quantitative easing policy.”

Shoppers take advantage of Black Friday sales at a Target store in the Brooklyn borough of New York City, U.S. November 25, 2016. REUTERS/Brendan McDermid

Big box retailer Target is scheduled to release third-quarter financial results ahead of the market open. Analysts anticipate that a strong back-to-school shopping season and strength in the retailer’s private-label brands supported Target’s third quarter. Same-store sales, a key metric for retailers, are expected to have jumped 3.4%, roughly the same growth seen in the year-ago period. Target is expected to report adjusted earnings of $1.19 per share on $18.22 billion in revenue, according to analysts polled by Bloomberg.

Target’s earnings come on the heels of Walmart’s blowout third quarter. The stock soared to record highs after the retailer’s strong results quelled fears that the ongoing trade war between the U.S. and China and the tariffs on Chinese imports would suppress business for American retailers.

Shares of Target have surged 73% this year and have significantly outperformed the broader market which has risen 27% in the same time period.

Another big name gearing up to report third quarter earnings ahead of the opening bell: Lowe’s.

Lowe’s quarterly results will be closely watched by investors after rival Home Depot (HDreported a disappointing quarter and slashed its sales outlook for the second consecutive quarter.

Though the two home improvement giants have both faced pressure from lumber price deflation, Lowe’s is expected to report same-store sales growth of 3.2% during the third quarter, which compares to 1.5% growth in the same period last year. Guidance provided by the company will be crucial and any commentary from management regarding tariffs and low mortgage rates will be monitored by investors.

Analysts polled by Bloomberg expect Lowe’s to report adjusted earnings of $1.35 per share on $17.70 billion in revenue during its third quarter. The options market is implying a 7% one-day move in either direction for the stock following the results.

Shares of Lowe’s rose 25% in 2019, while the S&P 500 (^GSPC) is up 27% and rival Home Depot jumped 34%.

Other notable reports scheduled for Wednesday include L Brands (LB) and Sonos (SONO) after the market close

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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