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Stock trading slightly lower after weaker-than-expected retail sales growth



Stocks were at a modestly weaker start on Friday, declining lower after weaker-than-expected growth in July. .

Market participants were also seeking a round of virtual trade talks between the US and China this weekend against a backdrop of rising tensions between the two countries.

What do key indexes do?

Dow Jones industrial average DJIA,
-0.30%
fell 61 points, or 0.2%, to around 27,829, while the S&P 500 SPX,
-0.18%
was out 3 points or less than 0.1%, at 3,370. Composition Nasdaq COMP,
-0.37%
shed 23 points, or 0.2%, to trade at 11,018.

The Dow fell 80.12 points, or 0.3%, to close at 27,896.72 on Thursday, while the S&P 500 SPX,
-0.18%
lost 6.92 points, or 0.2%, to close at 3,373.43, after hitting an overnight high at 3,387.24, temporarily trading above its February 19 closing record of 3,386.15. The Nasdaq rose 30.27 points, or 0.3%, to close at 11.042.50. Key indices remain on track for weekly earnings.

Are you running the market at all?

Retail sales rose 1.2% in July, the third straight monthly growth but weaker than the 2% growth forecast by economists surveyed by MarketWatch. Excluding vehicles and gasoline, sales rose 1.5%, beating expectations for a 1.1% increase. June sales were revised higher.

Overall, the report painted a positive picture of consumer activity, some analysts said. The figures left higher retail sales in July than those in January or February before the pandemic hit, noted Marshall Gittler, head of investment research at BDSwiss Holding PLC.

But economists warned that the report showed that consumer spending had lost steam, underscoring fears of a further slowdown.

The data “underscores that cautious consumers have become more cautious between reviving the virus and supporting stimulus fading,” said Lydia Boussour, senior economist at Oxford Economyics. She said the data also matched a stack on the firm’s self-healing tracker, confirming that “consumers are likely to hold on to a large force for their spending until a medical solution to the pandemic is found”.

Analysts said the continuing blockade between Congressional Democrats and the White House over a coronavirus aid package could be restrictive for the market. Talks on extending the measures, including $ 600 a week in additional unemployment benefits, which expired at the end of July, have stalled since the end of last week. President Donald Trump last weekend signed executive orders that will partially extend some measures but they face questions about their legality and logistics.

Meanwhile, virtual talks between US and Chinese officials this weekend are aimed at reviewing China’s compliance with the stage of a trade deal agreed last year. Sadness surrounds the talks amid rising tensions over China’s actions in Hong Kong and other issues.

For investors “to increase their risk exposure again, US Democrats and Republicans may need to agree on a new fiscal package, and US and Chinese officials may need to make encouraging remarks about their nations’ trade relations , “said Charalambos Pissouros, senior market analyst 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, despite expectations for a flat reading.

In other data, second-quarter productivity increased by 7.3%, while unit labor costs increased by 12.2%. Economists were looking for a 1.4% increase in productivity and an 8.7% increase in costs.

Industrial production in July grew by 3%, topping the forecast for growth of 2.7%. Capacity utilization last month increased to 70.6% from 68.5% in June, against expectations for a reading of 70.5%.

An initial reading for the University of Michigan Consumer Sense Index in August was made at 72.8 compared to expectations for 72.

Which companies are in focus?
  • Epic Games, the creator of “Fortnite” started a legal battle with him Apple Inc.
    AAPL,
    -1.16%
    and Google GOOG Alphabet Parents,
    -0.65%
    Google,
    -0.61%,
    accusing technology giants of illegally exploiting a monopoly on app purchases and applications.

  • Shares of Applied Materials Inc.
    AMAT,
    + 5.50%
    rose 6.5% after chip maker supplier late Thursday reported results and a outlook that reached Wall Street forecasts.

  • DraftKings Inc.
    DKNG,
    -7.46%
    Shares fell 8.1% after reporting a broader-than-expected loss, although earnings topped Wall Street expectations. The shares were already under pressure after Bloomberg reported that the Internal Revenue Service would require fantasy sports companies to pay federal excise taxes on their entry fees.

How are other markets being traded?

In Asia on Friday, China’s CSI 300 index 000300,
+ 1.48%
closed 1.5% higher, while Hong Kong’s Hang Seng HSI Index,
-0.18%
fell 0.2% and Japan’s Nikkei 225 NIK,
+ 0.17%
won 0.2%.

In Europe, the Stoxx 600 Europe Index SXXP,
-1.16%
traded 1.2% lower and FTSE 100 UKX,
-1.59%
fell to 1.7% on Friday, following a similar risk in last session.

Yield on the 10-year Treasury note TMUBMUSD10Y,
0.698%
was outside 1 basis point by 0.703%. Bond mismatures move in reverse in yields.

Prices of gold GC00,
-0.83%
dropped 0.7% to $ 1,957.50 an ounce, after gaining 1.1% on Thursday. Prices of crude oil CLU20,
-0.07%
were out 5 cents, or 0.1% at $ 42.20 a barrel.

Greenback continued its slide, with the ICE Dollar Index, DXY,
-0.27%
a dish gauge against half a dozen big rivals, dropping 0.2% to 93,121.


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