Stocks got off to a modestly weaker start on Friday, falling after July retail sales surged lower than expected, questioning the durability of the economy’s recovery from the crash. caused by a pandemic in the spring.
Market participants are also preparing for a round of virtual trade talks between the US and China later this week amid heightened tensions between the two countries.
What are the main indexes doing?
Dow Jones Industrial Average DJIA,
down 3 points or less 0.1%, at 3,370. Nasdaq Composite COMP,
down 23 points, or 0.2%, to 11,018.
The Dow on Thursday fell 80.12 points, or 0.3 percent, to end at 27,896.72, while the S&P 500 SPX,
lost 6.92 points, or 0.2%, to close at 3,373.43, after hitting an intraday high of 3,387.24, temporarily trading above February 19 closing record of 3,386 , 15. Nasdaq Composite gained 30.27 points, or 0.3%, higher than to close at 11,042.50. The main indexes are still on the weekly uptrend.
What drives the market?
Retail sales rose 1.2% in July, the third consecutive monthly increase but weaker than the 2% growth forecast by economists surveyed by MarketWatch. Excluding cars and gasoline, sales were up 1.5%, beating expectations for a 1.1% increase. June sales have been adjusted higher.
Overall, the report paints a positive picture of consumer performance, some analysts said. Marshall Gittler, head of investment research at BDSwiss Holding PLC, notes that the numbers cause July retail sales to be higher than January or February before the pandemic struck.
However, economists warned that the report showed a slight decrease in consumer spending, highlighting concerns about the possibility of further deceleration.
The data “stresses that alert consumers have become more cautious amid a resurgence of the virus and the fading stimulus support,” Lydia Boussour, senior economist at Oxford Economics, said. She said the data also matched a booth in the company’s own recovery tracking tool, confirming that “consumers have the ability to tightly control their spending until a medical solution is found. for pandemic. “
Analysts said the continued impasse between Democrats in parliament and the White House over the coronavirus aid package could limit market momentum. Negotiations to extend the measures, including $ 600 a week in additional unemployment benefits, which expire at the end of July have remained stalled since the end of last week. President Donald Trump last week signed executive orders that would partially extend some of the measures but those measures face questions of their legitimacy and logistics.
Meanwhile, virtual talks between US and Chinese officials later this week aimed at examining China’s compliance with the first-stage trade deal agreed last year. Frustration surrounding the negotiations due to growing tensions over Chinese actions in Hong Kong and other issues.
Charalambos Pissouros, senior market analyst, said: For investors “to increase the level of risk again, Democrats and Republicans may have to agree on a package. new policy, and US and Chinese officials may need to make encouraging remarks about the commercial relationship between their countries ”. at JFD Group, in a note.
The tone for global equities was not helped by a 1.1% drop in Chinese retail sales in July, compared with expectations for a steady result.
In other data, second quarter productivity increased by 7.3%, while labor cost increased by 12.2%. Economists are looking for a 1.4% yield increase and an 8.7% cost increase.
Industrial production in July increased by 3%, topping the forecast increase of 2.7%. Utilization occupancy in the previous month increased to 70.6% from 68.5% in June, compared with an expectation of 70.5%.
The University of Michigan’s initial results on August consumer sentiment were 72.8 compared with expectations of 72.
Which companies to focus on?
- Epic Games, the producer of “Fortnite” has waged a legal battle with Apple Inc.
and Google’s parent company Alphabet Inc. GOOG,
accuse the technology giants of illegally exploiting monopolies of apps and in-app purchases.
- Shares of Applied Materials Inc.
up 6.5% after chip-making supplier late Thursday reported results and prospects topped Wall Street forecasts.
- DraftKings Inc.
shares fell 8.1% after reporting larger-than-expected losses, despite revenues above Wall Street expectations. Stocks came under pressure after Bloomberg reported that the Internal Revenue Service would require fantasy sports companies to pay federal excise tax on their entry fees.
How do other markets trade?
In Asia overnight Friday, China’s CSI 300,000,000,
to close 1.5% higher, while the Hang Seng Index of Hong Kong HSI,
sliding 0.2% and Japan’s Nikkei 225 NIK,
increase by 0.2%.
In Europe, Index Stoxx 600 Europe SXXP,
trade 1.2% lower and FTSE 100 UKX,
fell 1.7% on Friday, following a similar drop in the previous session.
Yield on 10-year Treasury Bond TMUBMUSD10Y,
decreased by 1 basis point at 0.773%. Bond prices move inversely with yields.
Gold price GC00,
decreased 0.7% to 1,957.50 USD / ounce, after rising 1.1% on Thursday. Crude oil price CLU20,
down 5 cents, or 0.1%, at $ 42.20 / barrel.
Greenback continues to slide, with ICE US Dollar Index, DXY,
A measure of the currency against a half-dozen major rivals, down 0.2% to 93,121.