Stock index futures traded on opposite sides of unchanged Friday after July retail sales showed a weaker rise than expected.
Market participants this weekend were also eager for a round of virtual trade talks between the US and China against a backdrop of growing tensions between the two countries.
What do key indexes do?
Futures on the Dow Jones Industrial Average YM00,
were down 97 points, or 0.1%, at 27,726, while S&P 500 futures ES00,
lost 4.95 points, or 0.1%, to trade at 3,362.75. Nasdaq-100 futures NQ00,
were positive, however, 14.5 points, as 0.1%, to 11,189.75.
The Dow on Thursday DJIA,
fell 80.12 points, or 0.3%, to end at 27,896.72, while the S&P 500 SPX,
lost 6.92 points, or 0.2%, to close at 3,373.43, after hitting an intraday peak at 3,387.24, temporarily trading above its February 19 close of 3,386.15. The Nasdaq Composite COMP,
rose 30.27 points, as 0.3%, higher to close at 11,042.50. The major indices remain on course for winning gains.
What drives the market?
Retail sales rose 1.2% in July, the third straight monthly increase but weaker than the 2% increase forecast by economists surveyed by MarketWatch. Excluding cars and gasoline, sales increased 1.5%, beating expectations for a 1.1% increase. June sales were revised higher.
Overall, the report painted a positive picture of consumer activity, analysts said. The figures left retail sales higher in July than they were in January or February before the pandemic hit, noted Marshall Gittler, head of investment research at BDSwiss Holding PLC.
“In other words, this was a large number – [U.S. dollar]-positive! Or at least ‘risk-on’ positive – stocks should win, ‘he said in a note.
Analysts said the ongoing deadlock between congressional Democrats and the White House over a coronavirus help package could limit the upside to the market. Negotiations to extend measures, including $ 600 per week in additional unemployment benefits, which have expired at the end of July since the end of last week were halted. President Donald Trump last week signed executive orders that would extend some measures in part, but which raise questions about their legality and logistics.
Meanwhile, virtual talks between US and Chinese officials this weekend are meant to check on China’s compliance with the phase one trade agreement reached last year. Unrest surrounds the talks given growing tensions over China’s actions in Hong Kong and other problems.
For investors “to re-increase their risk exposures, U.S. Democrats and Republicans may need to agree on a new fiscal package, and U.S. and Chinese officials may provide encouraging comments on their nations’ trade relations,” Charalambos said. Pissouros, senior market analyst at JFD Group, in a note.
The tone for global equities was not helped by a 1.1% decline in Chinese retail sales in July, against expectations for a flat reading.
In other data, July’s industrial production is forecast to show an increase of 2.7%, while capacity utilization is expected to increase to 70.5% from 68.6% in June. A first reading on the University of Michigan’s Consumer Intensity Index in August is to thank 10 am Eastern, as well as June business inventory data.
Which companies are in focus?
- Epic Games, the maker of “Fortnite” started a legal battle with Apple Inc.
AAPL,
+ 1.77%
and Google parent Alphabet Inc. GOOG,
+ 0.78%
GOOGL,
+ 0.62% ,
accused the tech giants of illegally using a monopoly on app and in-app purchases. - Shares of Applied Materials Inc.
AMAT,
-2.15%
rose 3.7% in premarket trading after chipmaker supplier late Thursday reported results and a outlook that surpassed Wall Street forecasts. - DraftKings Inc.
DKNG,
+ 6.84%
shares were down 2.1% in premarmer trading after reporting a broader-than-expected loss, although earnings were above Wall Street expectations. The move was already under pressure after Bloomberg reported that the Internal Revenue Service requires fantasy sports companies to pay federal action taxes on their entry fees.
How do other markets trade?
In Asia overnight Friday, China’s CSI 300 Index 300300,
Closed 1.5% higher, while Hong Kong’s Hang Seng Index HSI,
0.2% glide and the Japanese Nikkei 225 NIK,
received 0.2%.
In Europe, the Stoxx 600 Europe Index is SXXP,
traded 1.2% lower and the FTSE 100 UKX,
dropped 1.5% on Friday, following a similar tumble in the previous session.
Proceeds from the 10-year Treasury note TMUBMUSD10Y,
was at 0.5 basis point at 0.668%, after hitting its highest yield since June 17th. Bond prices move upside down to yields.
GC00 Gold Prizes,
declined $ 16.40, or 0.8%, to reach $ 1954 an ounce, after a gain of 1.1% on Thursday. Edge oil prices CLU20,
added 4 cents, or about 0.1%, to $ 42.28 per barrel.
The greenback continued with its slide, with the ICE US Dollar Index, DXY,
a meter from the dollar against half a dozen major rivals, down 0.2% to 93,193.
.
