The S&P 500 remained virtually unchanged on Friday, as investors weighed mixed data on consumer confidence and retail sales against the upcoming trade meeting between Chinese and US officials.
Although forecasts missed in US retail sales data, the underlying numbers were stronger than anticipated, with a 1.2% decrease from the monthly 2% estimate. Consumer confidence was better than expected for August; The Consumer Sentence Index of the University of Michigan fell to 72.8 on Friday, compared to a forecast of 72.0.
The Dow Jones Industrial Average rose 34.30 points, or 0.1%, to 27,931.02 points. The S&P 500 slipped 0.58 to one point, down 0.1% to 3,372.85, which remained within the index’s near-all-time-high range. The Nasdaq Composite closed down 23 points or 0.2% at 11,019.30.
Tech shares’ weakness can be attributed to concerns about the upcoming meeting between US and Chinese officials to discuss trade, as US tech giants have significant performance in China of revenue and supply chains. But tech stocks have also been trading at higher valuations in recent weeks after tearing. Year over year, the Nasdaq S&P 500 is up 23% compared to 4.4% advance.
Chinese retail sales unexpectedly fell in July, and the travel sector suffered a fresh setback as Britain added France to its quarantine list. The Pan-European Stokes 600 index fell 1.2%, while the French CAAC was down 1.6% and the German DX was down 0.7%. The UK’s FTSE 100 slipped 1.5%.
Chinese retail sales unexpectedly fell 1.1% in July, improving on June’s 1.8% decline but marked the seventh consecutive monthly decline. Economists had estimated sales to be 0.1% higher, but surprisingly, fears about China’s economic recovery have increased. While the country’s industrial production was steadily increasing, it missed the FactSet consensus estimate.
“China was the first to have a coronovirus crisis and was arguably one of the first to come out of its first phase, so the fragile nature of its recovery offers an uncomfortable view of the future for other countries,” AJ Bell investment director Rus Said Mold.
Britain’s decision to include France and the Netherlands on its quarantine list amid growing coronavirus cases affected European travel and holiday stocks. From Saturday, passengers arriving in the UK from those countries will need to self-segregate for 14 days. The latest setback for the travel sector saw airlines suffer heavy losses with EasyJet early Friday.,
British Airways owner IAG,
And RyanAir all tumbling.
It was not just airlines feeling the effects of a decision that would likely lead to canceled flights and postponed holidays, as hotel chain Whitbread and Intercontinental Hotel and aircraft engine maker Rolls Royce were also among the steepest declines.
In the US, shares of DraftKings (DKNG) declined 5.9% after management reported a broader-than-expected loss for the second quarter, as sales were ahead of estimates. The online sports betting industry has been hurt by the absence of live sports in recent months, but activity resumed in July as bookmakers placed bets on other sports such as professional golf and the final fight.
Tesla (TSLA) shares were up 1.8% on the heels of an upgrade from Morgan Stanley.
Earlier this week Tesla announced plans for a 5-for-1 stock split, which would go into effect on August 31.
Shares of AMC Entertainment gained 4.3%. The company said late Thursday that it plans to reopen its theaters on 20 August. The theater chain plans to open two-thirds of the nearly 600 theaters in the US by Sept3.
Write Carlton English at Alexandra Skaggs Alexandra .scaggs @ barrons.com and [email protected]