By Joe Wallace 

The S&P 500 bobbed around the flatline Friday after new data showed a small pickup in retail spending last month, suggesting the continuation of a choppy economic recovery.

The broad index fell 0.3% shortly after the opening bell, pushing the S&P 500 further from breaching its pre-pandemic high. The S&P 500 has been flirting with its Feb. 19 record all week, crossing the level during intraday trading only to close lower.

The day-to-day swings have put the S&P 500 on course to end the week 0.5% higher, its weakest stretch over the past three weeks.

Friday's weak action followed the release of new retail sales data that showed spending rose 1.2% in July, down from an 8.4% rise in June. One factor behind the muted gain may have been the expiration of enhanced unemployment checks last month, lightening some consumers' pockets.

The end of those benefits has put pressure on lawmakers to reach a deal on new aid, but Democrats and the White House have been in a deadlock, contributing to some of the volatility over the past week.

"The market has been quite stoical this week," said Jane Foley, head of foreign-exchange strategy at Rabobank. "It's August, so we may have to wait until September to find any strong direction."

The moves of other major indexes reflected the S&P 500's decline. The Dow Jones Industrial Average fell 135 points, or 0.5%, to 27761.22, while the Nasdaq Composite slid 0.3%.

Investors, meanwhile, bought safer assets, including Treasurys. That pushed yields down to 0.703%, from 0.714% Thursday.

Tech and consumer discretionary stocks led the market lower, falling 0.3% and 0.4% in recent trading. Most other sectors were also in the red after notching minor losses.

Money managers are also awaiting trade talks between senior U.S. and Chinese officials, scheduled for Saturday. Relations have deteriorated in recent months, concerning investors who think fresh barriers to trade would further hurt the global economy.

The main thrust of the discussion is aimed at evaluating China's compliance with a bilateral trade agreement signed in January. Chinese Vice Premier Liu He, President Xi Jinping's chief trade negotiator with Washington, is expected to bring up concerns over the executive orders against the WeChat and TikTok apps.

"The tone of these talks will be crucial," Ms. Foley said. "There is a concern that China has perhaps not fulfilled its promises in, for example, importing agricultural or energy goods from the U.S."

In overseas markets, travel-and-leisure companies led European shares lower, pushing the Stoxx Europe 600 down 1.2%. The U.K. government late Thursday imposed a quarantine on people traveling from France, the latest in a series of restrictions designed to stem rising coronavirus cases in the region.

The Shanghai Composite Index rose 1.2% after data showing China's recovery continued in July, though the economy shed some momentum as Beijing eased off stimulus measures. Industrial production rose 4.8% from a year before but retail sales fell 1.1%.

-- Michael Wursthorn contributed to this article.

Write to Joe Wallace at Joe.Wallace@wsj.com

(END) Dow Jones Newswires

August 14, 2020 10:16 ET (14:16 GMT)

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