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Stocks – S&P Drifts Lower on Weak Retail Sales, China Worries

Published 2019-10-16, 03:47 p/m
© Reuters.
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Investing.com - Stocks drifted lower Wednesday on a weaker-than-expected report on retail sales and growing fears about how firm the Chinese trade deal really is.

The trade worries helped push energy stocks lower and weighed on tech stocks.

The S&P 500 was off 0.2%, with the Dow Jones industrials down 0.08%. The tech-heavy Nasdaq Composite and Nasdaq 100 indices dropped 0.3% each, in part because Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) moved 0.4% and 0.8% lower, respectively.

The retail sales report for September showed a 0.3% decline when most economists expected a gain. The decline -- the first since February -- boosted fears that a slowing global economy is affecting U.S. consumers.

At the same time, worries grew about the Chinese trade deal announced last week. President Donald Trump said it meant China would be buying $50 billion to $60 billion in U.S. farm products "in less than two years." But some analysts told The Wall Street Journal that that's way beyond what China has bought in any one year.

The deal ultimately could hinge on the U.S. suspending imposition of new 15% tariffs on $156 billion in Chinese imports. The tariffs are supposed to take effect Dec. 15. China may balk at the farm purchases if the tariffs aren't suspended.

The uncertainty weighed on futures trading for corn and soybeans, with both moving lower. Both commodities depend on exports.

The trade worries also affected tech stocks, especially chip stocks, because sales to China have been huge growth drivers. The Philadelphia Semiconductor Index fell 1.47%.

In addition, there was some disappointment that an agreement on Brexit wasn't announced. European stocks were mostly higher. Germany's DAX hit a 52-week high.

Homebuilders and other consumer discretionary stocks and communications services stocks like Facebook (NASDAQ:FB), Amazon.com (NASDAQ:AMZN) and Google parent Alphabet (NASDAQ:GOOGL) were higher. Energy, technology and financials were the weakest sectors.

Builders DR Horton (NYSE:DHI), KB Home (NYSE:KBH), MDC Holdings (NYSE:MDC) and William Lyon Homes (NYSE:WLH) all hit 52-week highs after the National Association of Home Builders reported builder confidence was at a 20-year high. The report cited low interest rates and a strong jobs market for the confidence.

General Motors (NYSE:GM) moved 1.1% higher after the automaker and the United Auto Workers said they reached a tentative deal that could end a month-old strike.

Pharmaceutical distributors rallied on news of a settlement of opioid lawsuits brought by states and local governments.

Oil prices moved up, as did precious metals prices. Palladium, a metal used in auto emission-control systems, hit $1,735 an ounce. Gold settled up $10.50 to $1,494 in New York.

Interest rates were mostly lower. The 10-Year Treasury yield fell to 1.747% from Tuesday's 1.769%.

Drug distributors McKesson (NYSE:MCK) and AmerisourceBergen (NYSE:ABC), trucking giant JB Hunt Transport Services (NASDAQ:JBHT) and fashion company Capri Holdings (NYSE:CPRI) were among the top S&P 500 performers on the day.

Drug maker Alexion Pharmaceuticals (NASDAQ:ALXN), electric utility giant Exelon (NASDAQ:EXC), information technology company DXC Technology (NYSE:DXC) and Salesforce.com (NYSE:CRM) were among the worst S&P 500 performers on Tuesday.

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