The Nasdaq and S&P 500 finished at records Friday, after bouncing between small gains and losses, as investors parsed mixed data on the strength of the U.S. consumer and monitored the spread of COVID-19 in China.
The bond and stock markets will be closed Monday in observance of Presidents Day.
How did major indexes fare?
The Dow Jones Industrial Average
shed 25.23 points, or nearly 0.1%, to end at 29,398.08, while the S&P 500
gained 6.22 points, or 0.2%, to finish at an all-time high close at 3,380.16. The Nasdaq Composite Index
added 19.21 points, or 0.2%, to close at a record 9,731.18.
For the week, the Dow advanced 1%, the S&P 500 1.6%, and the Nasdaq 2.2%.
What drove the market?
Despite the fresh all-time highs, some cracks emerged in what has been a seemingly impregnable segment of the U.S. economy: the U.S. consumer. Seeds of doubt were sown on Friday after a report on January retail sales showed sluggish activity, underscored by a 3.1% drop in sales at clothing stores.
“The market’s resilience in the past couple of years has been predicated on the belief that the consumer will continue to do well—although retail data has been mixed in that regard,” said John Carey, director of equity income for the U.S. at Amundi Pioneer, in an interview with MarketWatch.
The weaker-than-expected report on retail sales comes even as a separate measure of consumer sentiment surged above expectations to touch a near 15-year high in a preliminary February reading.
“It’s something that could undermine the market as we move forward, if the consumer pulls back,” Carey said, adding that capital spending by companies has been sluggish, while data on car and home sales also have shown signs of having reaching a plateau.
In other data, import prices rose 0.2% during the month, according to a separate government report, and have gained 0.3% in the past 12 months. Meanwhile, industrial production marked its fourth decline in five months in January, the Federal Reserve said falling 0.3%, in line with Wall Street expectations. Separately, the Commerce Department said business inventories rose a scant 0.1% in December.
“We have a consumer who is employed and wages are rising marginally,” Charlie Ripley, senior investment strategist for Allianz Investment Management told MarketWatch. “I think that’s a good backdrop for consumption at this point.”
But Ripley also said investors were being cautious ahead of the longer holiday weekend. “That’s had marginal pressure on stocks today,” he added.
Some of that concern has been wrought by the viral outbreak in China. Chinese officials on Friday said 121 more people had died from COVID-19, the disease caused by a novel strain of coronavirus that emerged in Wuhan in late 2019, over the previous 24 hours, bringing the total to 1,383. The country’s National Health Commission reported 5,090 new confirmed cases in mainland China, bringing the total to 63,851. The number of new cases jumped sharply on Thursday after a change in the government’s counting method.
Analysts said the changes to the methodology were fueling doubts about the accuracy of China’s figures.
Cleveland Federal Reserve Bank President Loretta Mester said Friday that fallout from the coronavirus on China could spill over to the U.S., but that business investment should otherwise pick up later this year.
Which companies were in focus?
- Shares of Nvidia Corp.
gained 7% after reporting late Thursday record quarterly data sales of $968 million. Opinion:Nvidia shocks Wall Street with surging data-center sales.
- Roku Inc.
shares lost 6.3%. The streaming-media company late Thursday delivered a better-than-expected earnings report and an upbeat forecast for the quarter and year ahead.
- Tesla Inc.
shares closed 0.5% lower a day after the electric-vehicle maker surprised investors by announcing plans to offer around $2 billion of common stock in an underwritten deal.
- Shares of Newmark Group Inc.
closed down 2.8% after an analyst downgrade.
- Canopy Growth Corp.’s U.S.-listed stock
surged 13.4% after reporting a narrower-than-expected fiscal third-quarter loss.
- Drug wholesaler stocks fell after The Wall Street Journal reported that 21 states had rejected their offer for a settlement over their alleged roles in spurring the opioid crisis. McKesson Corporation
shares were up less than 0.1% and AmerisourceBergen Corporation
shares were 0.2% lower.
- Shares of Newell Brands Inc.
advanced 3% after it delivered fourth-quarter earnings Friday morning that topped Wall Street estimates.
- Shares of Expedia Group Inc.
gained 11%, as the online travel booking company missed earnings.
- Kraft Heinz Co.
shares slumped 3.2% after Fitch Ratings cut its investment-grade debt ratings to speculative-grade or “junk” status (after Friday’s close S&P Ratings firm also downgraded the company), amid concerns over its ability to reduce its leverage.
What are other markets doing?
Oil continued to power higher. The price of a barrel of West Texas Intermediate crude for March delivery
gained 63 cents, or 1.2%, to settle at 52.05 a barrel on the New York Mercantile Exchange. WTI gained more than 3% this week, its first such gain in six weeks.
Gold for April delivery
rose 0.5% to settle at $1,586.40, notching a modest weekly gain on haven buying.
The U.S. dollar
was less than 0.1% higher against a basket of rival currencies.
In Europe, the Stoxx Europe 600
slipped 0.6% to end trade at 430.52.
In Asia overnight, the China CSI 300
rose 0.7% to close at 3,987.73, the Shanghai Composite
ticked up 0.4% to 2,917.01, and the Hang Seng Index
closed 0.3% higher, at 27,815.60. The Nikkei 225
lost 0.6% to 23,687.59.
The benchmark U.S. 10-year Treasury note
caught a bid, with the yield shedding 2.9 basis points to 1.587%. Bond yields fall when prices rise.