Investors took a benign view of surprisingly poor consumer spending trends this week, bidding US stocks higher despite downcast government and corporate reports on the retail sector.
The S&P 500 closed the week at record levels, adding 6.63 points (0.31 percent) at 2,122.73.
The Dow Jones Industrial Average rose 81.45 (0.45 percent) to 18,272.56, while the tech-rich NASDAQ Composite Index advanced 44.74 (0.89 percent) to 5,048.29.
Even with the gains, analysts said market sentiment remained subdued. The S&P 500 is only a hair above the 2,080 to 2,120 range it has held for most of the past three months.
“We’re range-bound; we just happen to be ending the week on the higher end of that range,” Wunderlich Securities chief market strategist Art Hogan said.
“Clearly if this new higher range were to be a breakout we’d see a follow-through, and there really hasn’t been any follow-through,” he said.
Hogan said US stocks received some support from a pullback in US Treasury yields and a retreat in the US dollar, which traded against the euro on Friday at the lowest level in more than three months.
The week’s most scrutinized data point, retail sales, came in at US$436.8 billion last month, essentially unchanged from March.
Also disheartening was Friday’s news that the University of Michigan’s US consumer sentiment index plummeted to 88.6 this month from 95.9 last month.
On the corporate side, there were one or two positive blips, such as results from upscale burger chain Shake Shack, which posted a 56.3 percent gain in first-quarter sales to US$37.8 million.
However, department chain giant Macy’s reported results that missed market expectations, as it cited a number of factors, including the West Coast port slowdown, severe winter weather and the impact of the dollar.
Macy’s said foreign visitors to stores in New York, Las Vegas and other US cities spent less due to the strong US currency.
Retailer Kohl’s missed analyst forecasts on sales, while J.C. Penney reported a US$167 million loss in the first quarter.
Gap said comparable sales for last month tumbled 12 percent compared with last year.
Hogan said the consumer weakness was especially disappointing in light of the drop in gasoline prices that was expected to boost consumption. However, he said it was too soon to know whether the slowdown in spending was seasonal or the sign of an important consumer shift toward building up savings.
“We’re creating more jobs and consumers ares saving more at the pump,” he said. “But we haven’t seen a clear path of those new savings and salaries coming into the marketplace.”
Briefing.com analyst Patrick O’Hare said the government’s flat retail sales report for last month “won’t leave the Fed feeling confident about raising the fed funds rate in June.”
In other corporate news, DuPont shareholders gave chief executive Ellen Kullman a big win, turning back an activist campaign from billionaire Nelson Peltz’s Trian Fund Management following a hard-fought proxy contest. Some analysts thought the outcome could embolden more companies to take a tougher line toward activists.
The week’s most high-profile merger was Verizon’s US$4.4 billion takeover of Internet pioneer AOL in an effort to boost the telecom giant’s presence in online media and advertising.
In other deals, Noble Energy bought Rosetta Resources for US$2.1 billion and industrial company Danaher acquired walter-filtration company Pall for US$13.8 billion.
Next week’s calendar includes earnings from retail behemoths Wal-Mart Stores and Home Depot, as well as US housing starts and existing-home sales data for last month. The US Federal Reserve will also release minutes from its monetary policy meeting last month.
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