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Chinese retail sales fell unexpectedly in July.
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The S&P 500 closed Friday almost unchanged, as investors mixed data weighing on consumer confidence and retail sales against an upcoming trade meeting between Chinese and U.S. officials.
While headline U.S. retail sales figures missed forecasts, with a monthly increase of 1.2% falling short of the 2% estimate, the underlying figures were strengthened by more than expected. Consumer confidence was better than expected for August; the University of Michigan Consumer Sentiment Index came in at 72.8 on Friday compared to forecasts of 72.0.
That helped hold U.S. stocks better than markets in Europe, even as delays on additional U.S. stimulus roads sent sentiment.
The Dow Jones Industrial Average gained 34.30 points, or 0.1%, to 27,931.02. The S&P 500 slipped 0.58 from a point, less than 0.1%, to 3,372.85, remaining within close range of the index’s all time. The Nasdaq Composite dropped 23 points, or 0.2%, to 11,019.30.
The weakness of tech stocks could be attributed to concerns about the upcoming meeting between U.S. and Chinese officials to discuss trade, as revenue and U.S. chain of tech tech giants have a major exposure for China. But tech stocks are also trading at high ratings after shedding tears in recent weeks. Year-on-year, the Nasdaq is up 23% compared to the S&P 500’s up 4.4%.
Chinese retail sales fell unexpectedly in July, and the travel sector was given a fresh slap when the UK added France to its quarantine list. The pan-European Stoxx 600 index fell 1.2%, while the French CAC slipped 1.6% and the German DAX was 0.7% lower. The UK’s FTSE 100 slipped 1.5%.
Chinese retail sales fell unexpectedly 1.1% in July, improving on the 1.8% dip in June, but marking a seventh consecutive monthly decline. Economists had estimated sales 0.1% higher, but the surprising fall caused fears about China’s economic recovery. While the country’s industrial production continued to grow, FactSet lacked consensus estimates.
“China was first in the coronavirus crisis and probably one of the first to emerge from its initial phase, so the fragile nature of its recovery provides an uncomfortable view of the future for other countries,” said AJ Bell Investment Director Russ Mold.
The UK’s decision to add France and the Netherlands to its quarantine list amid growing cases of coronavirus hit European travel and holiday stocks. From Saturday onwards, travelers coming from those countries in the UK will be required to allow 14 days of self-isolation. The latest blow to the travel sector saw airlines suffer early on Friday, with easyJet,
British Airways owner IAG,
and Ryanair all tumbling.
It was not just airlines that suffered the consequences of a decision that was likely to lead to canceled flights and delayed vacations, as hotel chains Whitbread and Intercontinental Hotels, and aircraft engine maker Rolls Royce were also among the sharpest decliners.
In the US, shares of DraftKings (DKNG) slipped 5.9% after management managed a broader-than-expected loss for the second quarter, even when sales came ahead of estimates. The online betting sports sector has been hurt by a lack of live sports in recent months, but activity returned in July when bettors bet on other sports such as professional golf and ultimate fighting.
Tesla (TSLA) shares were up 1.8% on the heels of an Morgan Stanley upgrade.
Earlier this week, Tesla announced plans for a 5-for-1 action split, which will take effect on August 31st.
AMC Entertainment shares rose 4.3%. The company said late Thursday that it plans to make a start with a phase resumption of its theaters on August 20, with measures for social distance. The theater chain plans to open about two-thirds of its roughly 600 theaters in the U.S. by Sept. 3.
Write to Alexandra Scaggs at [email protected] and Carleton English at [email protected]
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