XOM Exxon Mobil Corp

By Ellie Ismailidou and Wallace Witkowski, MarketWatch

Weak data on retail sales, wholesale prices weigh on the benchmarks

U.S. stocks retreat to session lows Friday, putting weekly gains in jeopardy, as weakness in shares of mining and chemical companies, along with a rise in active oil rigs, blunted an advance in the energy sector and rising oil prices.

The slump kept all three main stock-market benchmarks, which all hit all-time highs on the same day for the first time since 1999 (http://www.marketwatch.com/story/slumping-oil-prices-look-set-to-keep-lid-on-us-stock-rally-2016-08-11) on Thursday, below their record levels.

The S&P 500 index was down 5 points, or 0.2%, at 2,181, weighed by 3% declines in Alcoa Inc.(AA) and Nucor Corp.(NUE), and Dow Chemical Co.(DOW), followed by a 0.4% loss in the financials sector. Three of the index's 10 sectors were in positive territory, with energy leading the gains, up 0.5%. Earlier, the index dropped as low as 2,179.30.

The Dow Jones Industrial Average slipped 65 points, or 0.3%, to 18,549, pulled down by a 2.1% drop in DuPont (DD) and a 1% drop in Microsoft Corp.(MSFT) but buoyed by a 1.4% gain in Exxon Mobil Corp.(XOM)The Dow industrials had earlier touched a session low of 18,535.86.

Meanwhile the Nasdaq Composite Index was off 7 points, or 0.1%, at 5,221, after being down by as many as 13 points earlier.

Stocks had dipped to fresh lows on the session following a climb in oil rigs for a seventh week in a row (http://www.marketwatch.com/story/oil-futures-pare-gains-after-data-show-7th-straight-weekly-rise-in-the-us-oil-rig-count-2016-08-12), taking some steam out of energy gains. Oil futures rose 1.6% following choppy action earlier, as officials from Saudi Arabia sparked fresh hopes for a collective production freeze (http://www.marketwatch.com/story/oil-prices-extend-gains-after-saudi-hints-over-freeze-pact-2016-08-12). Crude is on track for a weekly gain of over 5%.

Meanwhile, investors grappled with weaker-than-expected retail sales data and an unexpected drop in wholesale prices.

U.S. retail sales stalled in July after three straight monthly gains, according to government data released Friday. (http://www.marketwatch.com/story/retail-sales-stall-in-july-2016-08-12)Retail sales, which have increased 2.3% over the past 12 months, are an important part of consumer spending, which is the backbone of the U.S. economy.

Meanwhile, U.S. wholesale prices fell 0.4% in July, the biggest drop since September 2015, according to a government report released Friday (http://www.marketwatch.com/story/us-wholesale-prices-fall-sharply-in-july-2016-08-12). (http://www.marketwatch.com/story/us-wholesale-prices-fall-sharply-in-july-2016-08-12) June business inventories (http://www.marketwatch.com/story/us-june-business-inventories-rise-02-2016-08-12-10103229) came in as expected, rising 0.2%, and the Producer Price Index was down 0.4% after jumping 0.5% in June, while over the past year overall producer prices are down 0.2% in unadjusted terms.

On the bright side, consumer sentiment ticked up (http://www.marketwatch.com/story/consumer-sentiment-ticks-up-in-august-despite-higher-expenses-lower-wage-gains-2016-08-12) in early August as better views of the economy offset declines in views about personal finances.

While stocks turned negative after the release, gold gained, the dollar slumped and Treasury yields plunged to their second-lowest level in history. The weak data are likely to firm the view for some market participants that the economy isn't strong enough to tolerate a rate increase in September, or later in 2016.

"Based on the PPI and retail-sales figures, all indications now look like a [Federal Reserve] rate increase in 2016 is clearly off the table," said Tom di Galoma managing director at Seaport Global Holdings, in an email shortly after the release.

Sector performance also reflected the market's expectation of interest rates being "lower for longer," said Diane Jaffee, senior portfolio manager at TCW. Investors betting the Fed will remain on hold, pile into bond-like equities, most notably utility stocks, Jaffee said.

But at the same time, the strong gains in energy shares tells a different story, one of a potentially stronger risk appetite and further gains for the broader market, she said.

Among individual retailers, J.C. Penney Co. Inc.'s (JCP) shares gained 3.8% after the retailer reported narrower-than-expected second-quarter losses, though sales were just below estimates (http://www.marketwatch.com/story/jc-penney-shares-fall-despite-smaller-second-quarter-losses-2016-08-12). Meanwhile, Nordstrom Inc.(JWN) shares jumped 7.7% after posting better-than-expected sales and raised profit projections for the year (http://www.marketwatch.com/story/nordstrom-profit-tops-view-as-revenue-declines-2016-08-11).

Friday's moves came after on Thursday retailers like Macy's Inc.(M) and Kohl's Corp.(KSS) all posted better-than-expected quarterly earnings, (http://www.marketwatch.com/story/nordstroms-stock-soars-amid-hopes-for-upbeat-results-for-a-change-2016-08-11) (http://www.marketwatch.com/story/nordstroms-stock-soars-amid-hopes-for-upbeat-results-for-a-change-2016-08-11)helping the broader market jump to all-time highs. Macy's was down 1.1% on Friday, after closing 17% higher on Thursday, while Kohl's on Friday added 1% to Thursday's 16% gain.

See:3 reasons this U.S. stock-market rally won't stop (http://www.marketwatch.com/story/this-time-its-different-3-reasons-the-us-stock-rally-wont-stop-2016-08-12)

Other markets: Asian markets closed higher, with some credit going to the upbeat U.S. action on Thursday. But European stocks were roughly flat (http://www.marketwatch.com/story/european-stocks-battle-for-the-black-and-another-win-2016-08-12), though still on track for sizable weekly gains.

Other individual movers: Beyond the retailers, Nvidia Corp. shares (NVDA) rose 3.9% after the maker of graphics chips late Thursday posted better-than-expected earnings (http://www.marketwatch.com/story/nvidia-rises-to-record-highs-before-and-after-earnings-report-2016-08-11).

Silicon Graphics International Corp.(SGI) jumped 29% following news late Thursday that Hewlett Packard Enterprise Co.(HPE) plans to pay $275 million (http://www.marketwatch.com/story/hewlett-packard-enterprise-buying-silicon-graphics-for-275-million-2016-08-11) for the maker of server, storage and software products.

--Victor Reklaitis in London contributed to this article.

(END) Dow Jones Newswires

August 12, 2016 13:36 ET (17:36 GMT)

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