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 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 4 points, or 0.2%, at 2,182,
weighed by sharp 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 0.6%. Earlier, the
index dropped as low as 2,179.30.
The Dow Jones Industrial Average slipped 57 points, or 0.3%, to
18,557, pulled down by a 2.1% drop in DuPont (DD) and a 1.1% drop
in IBM Corp.(IBM) 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 4 points, or 0.1%,
at 5,224, 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),
which took 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 also
declined 0.5% to settle at $1,335.80 an ounce, the dollar slumped
and Treasury yields fell back toward 1.50%. 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 7% 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 8.8% 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 0.5% on
Friday, after closing 17% higher on Thursday, while Kohl's on
Friday added 1.4% 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 4.6% 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 14:26 ET (18:26 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.