Retail-sales dip weighs on stocks
U.S. stock indexes clawed most of the way back from an early slide Thursday to finish mostly lower, ending a four-day winning streak for the benchmark S&P 500 index.
The Dow Jones industrial average fell 103.88 points, or 0.4 percent, to 25,439.39. Earlier, the average had been down 235 points.
The S&P 500 index dropped 7.30 points, or 0.3 percent, to 2,745.73. The Nasdaq composite edged up 6.58 points, or 0.1 percent, to 7,426.95. Small-company stocks rose. The Russell 2000 index added 2.16 points, or 0.1 percent, to 1,545.11.
Losses in banks, retailers and consumer products makers offset gains in health care stocks, technology companies and elsewhere in the market as investors weighed new data showing retail sales slumped in December amid a disappointing Christmas shopping season.
The Commerce Department reported that December retail sales posted their biggest drop since September 2009. Separately, the National Retail Federation issued figures showing U.S. holiday season sales were weaker than expected.
While the discouraging retail sales data initially put investors in a selling mood, the sell-off reversed course as traders had some time to reconsider how useful the 2-month-old data would be in forecasting consumer spending trends in coming months.
“This was a really big shock because it was a nine-year low, in terms of its move, but the market doesn’t care what happened two months ago,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab. “The market really wants to know what’s going on today, and really more importantly what to look for the next month.”
Slightly more stocks rose than fell on the New York Stock Exchange. Major European indexes finished mostly lower.
Investors retreated into government bonds after the weak report on U.S. retail sales, sending benchmark yields lower. The yield on the 10-year Treasury note fell to 2.65 percent from 2.70 percent late Wednesday. That yield is used to set rates on mortgages and other kinds of loans.
The Commerce Department said retail sales fell 1.2 percent in December from the previous month. Total retail sales for 2018 rose 5 percent from the previous year. Separately, the National Retail Federation, the nation’s largest retail trade group, said that holiday sales increased a lower-than-expected 2.9 percent as worries about the trade war with China, the government shutdown and stock market turmoil dampened shopper spending in December.
Retailers had foreshadowed the results in the new reports earlier this month when they disclosed weak holiday season sales.
The sales data pulled shares in Macy’s and other retailers lower. But those losses were tempered by midafternoon as some economists and analysts questioned whether the government shutdown and resulting delay in collecting the retail-sales data had made the results an unreliable barometer of consumer spending in coming months.
Macy’s fell 0.4 percent, while Amazon slid 1.1 percent. J.C. Penney bounced back to finish with a 0.7 percent gain.
Makers of consumer products also took a beating after Coca-Cola said its sales could slow this year because of the strong dollar. Coca-Cola slumped 8.4 percent.
Markets had been moving higher this week as investors became optimistic that new talks could move the U.S. and China closer to a resolution of their trade fight.
The negotiations began Monday, but key figures were set to meet Thursday and today in an attempt to avoid an escalation of tariffs that have raised prices for companies and consumers.