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.
Nissan Motor Co has agreed to sell its global headquarters in Yokohama for ￥97 billion (US$630 million) to a group sponsored by Taiwanese autoparts maker Minth Group (敏實集團), as the struggling automaker seeks to shore up its financial position. The acquisition is led by a special purchase company managed by KJR Management Ltd, a Japanese real-estate unit of private equity giant KKR & Co, people familiar with the matter said. KJR said it would act as asset manager together with Mizuho Real Estate Management Co. Nissan is undergoing a broad cost-cutting campaign by eliminating jobs and shuttering plants as it grapples
TEMPORARY TRUCE: China has made concessions to ease rare earth trade controls, among others, while Washington holds fire on a 100% tariff on all Chinese goods China is effectively suspending implementation of additional export controls on rare earth metals and terminating investigations targeting US companies in the semiconductor supply chain, the White House announced. The White House on Saturday issued a fact sheet outlining some details of the trade pact agreed to earlier in the week by US President Donald Trump and Chinese President Xi Jinping (習近平) that aimed to ease tensions between the world’s two largest economies. Under the deal, China is to issue general licenses valid for exports of rare earths, gallium, germanium, antimony and graphite “for the benefit of US end users and their suppliers
Dutch chipmaker Nexperia BV’s China unit yesterday said that it had established sufficient inventories of finished goods and works-in-progress, and that its supply chain remained secure and stable after its parent halted wafer supplies. The Dutch company suspended supplies of wafers to its Chinese assembly plant a week ago, calling it “a direct consequence of the local management’s recent failure to comply with the agreed contractual payment terms,” Reuters reported on Friday last week. Its China unit called Nexperia’s suspension “unilateral” and “extremely irresponsible,” adding that the Dutch parent’s claim about contractual payment was “misleading and highly deceptive,” according to a statement
PERSISTENT RUMORS: Nvidia’s CEO said the firm is not in talks to sell AI chips to China, but he would welcome a change in US policy barring the activity Nvidia Corp CEO Jensen Huang (黃仁勳) said his company is not in discussions to sell its Blackwell artificial intelligence (AI) chips to Chinese firms, waving off speculation it is trying to engineer a return to the world’s largest semiconductor market. Huang, who arrived in Taiwan yesterday ahead of meetings with longtime partner Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), took the opportunity to clarify recent comments about the US-China AI race. The Nvidia head caused a stir in an interview this week with the Financial Times, in which he was quoted as saying “China will win” the AI race. Huang yesterday said
RSS