U.S. stocks are slightly lower on Friday, despite fresh data showing a stark comeback in consumer spending. April retail sales rose 1.3 percent, beating estimates of 0.9 percent and a sharp reversal from the 0.3 percent drop seen in March. Newslook
Stocks were mixed Friday as investors digest weak first-quarter retail earnings with upbeat April sales data in a week that has been marred by concerns about the strength of the retail sector.
At midday, the Dow Jones industrial average was down 0.1% and the broader Standard & Poor’s 500 stock index fell 0.1%. The technology packed Nasdaq composite was up 0.2%.
Retail sales rebounded in April and jumped 1.3% after dropping 0.3% in March, the Commerce Department reported before the bell. It was the largest rise in 13 months and the the increase was partly due to higher gasoline prices and auto sales. Retail sales, excluding gas and autos, rose 0.6%.
The upbeat news on retail sales in April came as several more retailers reported soft sales in the first quarter:
• Nordstrom (JWN), a retailer that caters to upscale shoppers, was the latest retailer to post poor first-quarter results, pushing its shares down 12% Friday. The sizable sales miss injects a fresh sense of worry into investors trying to decipher whether weak sales at department stores and apparel retailers is signaling a consumer slowdown, or whether its specific to a sliver of the retail space.
• J.C. Penney (JCP) reported sales that fell well below analyst expectations as the retailer reported a loss for the quarter.
But the big beat on overall retail sales figures for April helped dispel some of the consumer-related fears.In fact, it suggests that there has been a resurgence in consumption, following a weak first quarter.
“The retail sales report shows that recent claims of the demise of the U.S. consumer have been greatly exaggerated,” Steve Murphy, U.S. economist at Capital Economics wrote in a report to clients.
Sales softness suffered by high-profile retailers has been the latest setback for a stock market that has stalled in recent weeks after a rally off of the mid-February lows pushed the broad stock market up 14%. Stocks are also under pressure from rising valuations, a third straight quarter of negative profit growth for the S&P 500 and ongoing angst about the health of the U.S. and global economies.
The major U.S. stock indexes have also been hurt by a continued fall in shares of iPhone maker Apple (AAPL). The stock continues to be under pressure following its first quarter earnings report in late April that showed the first-ever quarterly decline in iPhone sales due to a maturing smart phone space. Apple was briefly supplanted Thursday as the world’s most valuable company measured by market value by Google (GOOGL) parent Alphabet. Apple shares are down 14.2% in 2016 and have fallen 2.6% so far this week heading into Friday’s trading.
In Apple news, the company reported making a $1 billion investment in Chinese ride-sharing service Didi Chuxing.
Wall Street was also digesting a fresh batch of economic data. The University of Michigan’s May reading on consumer sentiment came in stronger than expected and is at its higest level in 11 months.
The price of U.S.-produced crude was also in retreat, falling 55 cents, or 1.1%, to $46.19 a barrel.
Stocks were mainly lower around the globe. In Europe the Stoxx Europe 600 was down 0.4%. In Asia, Japan’s Nikkei 225 fell 1.4%, while stocks in Hong Kong fell 1% and shares in mainland China’s Shanghai composite slipped 0.3%.