Wall Street overcomes early losses on grim retail sales data

Of the 11 major sectors in the S&P 500, 5 were in negative territory, with consumer staples and financials showing the biggest per centage declines. ― Reuters pic
Of the 11 major sectors in the S&P 500, 5 were in negative territory, with consumer staples and financials showing the biggest per centage declines. ― Reuters pic

NEW YORK, Feb 15 — Wall Street struggled to reverse early losses yesterday as an unexpected drop in retail sales dampened investor hopes for progress at the ongoing US-China trade talks in Beijing.

The S&P 500 eked out a small gain and held above its 200-day moving average, a key technical level. The Nasdaq turned positive, while the Dow remained slightly lower, weighed down by consumer staples and tariff-sensitive industrials.

All three major US stock indexes were held back by rate-sensitive financial stocks as US Treasury yields fell on weaker-than-expected economic data.

Talks to defuse the ongoing tariff dispute between the world’s two largest economies moved to a higher level as US-China negotiations progressed in Beijing ahead of the March 1 deadline.

But optimism about the trade talks was undercut by a report from the US Commerce Department showing retail sales in December suffered their biggest drop in more than nine years.

Separate reports from the Labour Department, showing a surprise increase in unemployment claims and an unforeseen dip in producer prices, pointed to a slowdown in US economic activity.

“There’s no getting around it, (December) was a weak month for retail,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “Concern about the economy is now reflected in Q1 estimates, which are now negative.”

Indeed, with the fourth-quarter reporting season now more that three-fourths complete, analysts now see earnings growth of 16.2 per cent for the quarter, according to Refinitiv data.

But first-quarter estimates are less favorable. They show a 0.3 per cent year-on-year decline, which would mark the first quarter of negative growth since the earnings recession that ended in 2016.

The Dow Jones Industrial Average fell 11.22 points, or 0.04 per cent, to 25,532.05, the S&P 500 gained 1.07 points, or 0.04 per cent, to 2,754.1 and the Nasdaq Composite added 24.67 points, or 0.33 per cent, to 7,445.05.

Of the 11 major sectors in the S&P 500, 5 were in negative territory, with consumer staples and financials showing the biggest per centage declines.

Cisco Systems Inc rose 2.7 per cent on the heels of a better-than-expected earnings report as the network gear maker benefited from strength in newer businesses and shrugged off the impact of the US-China trade war.

Shares of American International Group Inc slid 7.6 per cent, on course for its worst day in 4 years after the global insurer posted a quarterly loss.

Coca-Cola Co shares fizzled, dropping 7.6 per cent and providing the biggest drag on the Dow after its full-year profit forecast fell well below Wall Street expectations.

Amazon.com dipped 0.7 per cent after pulling the plug on its planned headquarters in New York due to local opposition.

Canada Goose’s quarterly results and profit forecasts beat analyst expectations. Still, the luxury coat maker’s US-listed shares sank 12.1 per cent.

Avon Products Inc plunged 11.4 per cent after the multi-level marketing cosmetics brand missed quarterly revenue estimates.

Advancing issues outnumbered declining ones on the NYSE by a 1.49-to-1 ratio; on Nasdaq, a 1.49-to-1 ratio favored advancers.

The S&P 500 posted 17 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 61 new highs and 22 new lows. — Reuters