The S&P 500 closed nearly flat on Friday as investors weighed mixed data on consumer confidence and retail sales against an upcoming trade meeting between Chinese and US officials.
While major US retail sales missed forecast and a monthly increase of 1.2% fell short of the 2% estimate, the underlying numbers strengthened more than expected. Consumer confidence was better than expected in August. The University of Michigan’s Consumer Sentiment Index stood at 72.8 on Friday, compared to a forecast of 72.0.
This has helped US stocks outperform European markets, even if delays in additional US stimulus weighed on sentiment.
The Dow Jones Industrial Average rose 34.30 points, or 0.1%, to 27,931.02. The S&P 500 fell 0.58 points, less than 0.1%, to 3,372.85, staying within the narrow range of the index’s all-time high. The Nasdaq Composite fell 23 points, or 0.2%, to 11,019.30.
Tech stocks weakness could be attributed to concerns about the upcoming meeting between U.S. and Chinese officials to discuss trade, as U.S. tech giants’ revenue and supply chains have significant exposure to China. Tech stocks, however, are also trading at high valuations after having suffered a rift in recent weeks. Since the beginning of the year, the Nasdaq is up 23%, compared to the S&P 500’s 4.4% gain.
Chinese retail sales fell unexpectedly in July and the travel sector was dealt a new blow when the UK put France on its quarantine list. The pan-European Stoxx 600 index fell 1.2%, while the French CAC fell 1.6% and the German DAX fell 0.7%. The UK’s FTSE 100 was down 1.5%.
Chinese retail sales unexpectedly fell 1.1% in July, improving from a 1.8% decline in June, but represent a seventh straight monthly decline. Economists had estimated sales would rise 0.1%, but the surprising decline raised fears about China’s economic recovery. As the country’s industrial output continued to grow, they fell short of the FactSet consensus estimates.
“China was the first country in the coronavirus crisis and arguably one of the first to emerge from its early stage. The fragile nature of its recovery offers other countries an uncomfortable glimpse into the future,” said Russ Mold, investment director of AJ Bell .
The decision by the UK to quarantine France and the Netherlands amid rising coronavirus cases hit European travel and leisure stocks. From Saturday, travelers coming to the UK from these countries will have to self-isolate for 14 days. The recent blow to the travel sector saw airlines suffer heavy losses early Friday with easyJet,
British Airways owner IAG,
and Ryanair all fall.
It wasn’t just airlines that felt the effects of a decision likely to result in canceled flights and postponed vacations, as hotel chains Whitbread and Intercontinental Hotels and aircraft engine maker Rolls Royce were among the sharpest declines.
In the US, DraftKings (DKNG) shares were down 5.9% after management posted a better-than-expected loss for the second quarter, despite sales above estimates. The online sports betting industry has been hurt by the lack of live sports in recent months, but activity rebounded in July as bettors turned to other sports like professional golf and ultimate fighting.
Tesla (TSLA) shares rose 1.8% after upgrading from Morgan Stanley.
Earlier this week, Tesla announced plans for a 5-for-1 stock split that will take effect on August 31.
AMC Entertainment shares rose 4.3%. The company announced late Thursday that it plans to begin a gradual reopening of its theaters on Aug. 20, with social distancing measures in place. The theater chain plans to open around two thirds of its 600 theaters in the United States by September 3.