Closing Market Summary: Stocks Slip While Crude Oil Marks Six-Year Low
The stock market ended the Thursday session on a modestly lower note after spending some time on both sides of the unchanged level. The S&P 500 shed 0.1% while the Dow Jones Industrial Average eked out a slight gain (+0.03%).
Before delving into the details of today's session, it is worth noting that the People's Bank of China tried to calm investor fears during overnight action by holding a press conference. During that conference, bank officials said the yuan adjustment "is almost complete" and called the rumors of a 10.0% devaluation "nonsense." Markets across Asia posted gains while European indices ended mostly higher.
Once the U.S. session got going, stocks slipped from their opening levels, but the early weakness was largely isolated to the energy sector (-1.4%), which retreated alongside crude oil. The energy component faced selling pressure throughout the day, notching a fresh six-year low under $42.00/bbl during intraday action before inching up to settle lower by 2.3% at $42.25/bbl.
The daylong weakness in the energy sector was not enough to keep the market in negative territory as the four largest sectors displayed modest strength at the start and helped the market climb out of the red; however, only two groups were still in the green once the closing bell rang. The consumer discretionary sector (+0.6%) and financials (+0.3%) held their gains throughout the day while technology (-0.2%), and health care (-0.2%) slipped ahead of the close.
Notably, the discretionary sector received broad support from automakers, homebuilders, and retailers after the Retail Sales report for July beat expectations. On the earnings front,
News Corp (NWSA 15.19, +1.07) spiked 7.6% after reporting a two-cent beat on light revenue while other media names ended mixed. Meanwhile, the homebuilder group displayed notable strength with
iShares Dow Jones US Home Construction ETF (ITB 28.66, +0.43) spiking 1.5%. Despite today's outperformance, the discretionary sector remains lower by 2.4% so far in August, which puts the group behind the other nine sectors.
Elsewhere, financials (+0.3%) displayed relative strength throughout the session as the sector rebounded from yesterday's underperformance. Heavyweights like
Citigroup (C 57.30, +0.39) and
JPMorgan Chase (JPM 67.55, +0.31) gained near 0.6% apiece while the sector narrowed its week-to-date loss to 0.4%.
Also of note, the top-weighted technology sector (-0.2%) settled in-line with the market while chipmakers struggled, evidenced by a 1.0% decline in PHLX Semiconductor Index.
Advanced Micro (AMD 1.79, -0.11) was a clear soft spot in the chipmaker index as the stock fell 5.8%.
As for large cap tech names,
Cisco Systems (CSCO 28.70, +0.80) spiked 2.9% after beating bottom-line estimates on light revenue while other influential components ended in mixed fashion.
Treasuries retreated during overnight action and they added to their losses during the session. The benchmark 10-yr yield rose six basis points to 2.13%.
Today's participation was a bit below recent averages as 750 million shares changed hands at the NYSE floor.
Economic data included Initial Claims, Retail Sales, Import/Export Prices, and Business Inventories:
- Weekly initial claims increased to 274,000 from a downwardly revised 269,000 (from 270,000) while the consensus expected an increase to 271,000
- The four-week moving average fell to 266,250 from 268,000, representing the lowest level since April 2000, when it also reached 266,250
- Continuing claims increased to 2.273 million from an upwardly revised 2.258 million (from 2.255 million) while the consensus expected a decline to 2.247 million
- Retail sales increased 0.6% in July while the consensus expected an increase of 0.5%
- An upward revision lifted June sales to the flat line from -0.3%
- Motor vehicle demand played a large part in the increase in sales growth as motor vehicle manufacturers reported unit sales increased to 17.6 million SAAR in July from 17.0 million SAAR in June. That gain pushed up sales at motor vehicle and parts dealers by 1.4% after declining 1.5% in May
- Excluding autos, retail sales increased 0.4% in July after increasing an upwardly revised 0.4% (from -0.1%) in June
- Export prices, excluding agriculture, decreased 0.4% in July after decreasing 0.1% in the prior reading
- Excluding oil, import prices decreased 0.3%, which followed last month's decrease of 0.2%
- Business inventories increased 0.8% in June after an unrevised 0.3% gain in May while the consensus expected an increase of 0.3%
- The inventory changes from manufacturers (0.6%) and merchant wholesalers (0.9%) were known prior to the release. The only new information was that retailer inventories increased 0.9% in June after a 0.2% gain in May
- Retailer inventory growth was strong across the board as all sectors reported growth above 0.5%, with the largest gains coming from motor vehicles (1.4%), building materials (1.0%), and furniture (0.9%)
Tomorrow, July PPI (consensus 0.1%) will be reported at 8:30 ET while July Industrial Production (consensus 0.3%) and Capacity Utilization (expected 78.0) will both be released at 9:15 ET. The day's data will be topped off with the 10:00 ET release of the preliminary reading of the Michigan Sentiment Index for August (expected 93.7).
- Nasdaq Composite +6.3% YTD
- S&P 500 +1.2% YTD
- Russell 2000 UNCH YTD
- Dow Jones Industrial Average -2.3% YTD