Stocks Are On Track to Snap Six-Week Winning Streak
Stocks moved lower on Friday and were on track to snap a six-week winning streak as debate over whether the Federal Reserve might hike rates in December continued.
The S&P 500 was down 0.64%, the Dow Jones Industrial Average fell 0.78%, and the Nasdaq slid 0.88%.
Cleveland Fed President Loretta Mester said an extended period of rates at zero was a threat to financial stability and that the time for the Fed to make their move was "quickly approaching." In a speech in Cleveland, Mester said she expects inflation to gradually return to its 2% target and the labor market to continue to improve. The odds are greater on a December rate hike after a stellar October jobs report supported the case for tighter monetary policy.
Retail sales in October climbed just 0.1%, the Commerce Department said Friday. Spending declined at gas stations and electronics stores. Economists had expected a far-stronger reading of 0.3%. Excluding volatile items such as gas and automobiles, sales rose 0.3% over the month. September sales were revised down to a flat reading from a previous reading of 0.1% growth.
U.S. producer prices dropped 0.4% in October, likely a result of lower sales at retailers. Economists had expected the measure to climb 0.2%. Excluding volatile items, core prices fell just 0.1%.
"Taken together, these economic reports present more ambiguity for the [Fed] heading into next month's highly anticipated monetary policy meeting," Matt Weller, senior market analyst at FOREX.com, wrote in a note. "At this point, the central bank still looks likely to raise interest rates, but if (Friday's) releases are the start of a run of weak data over the next month, the Fed could still push back its long-awaited rate hike."
Consumer sentiment came in higher than expected, jumping to a reading of 93.1 in November from 90 in October, according to the University of Michigan Sentiment Index. The measure is now at its highest level since July. Economists had expected a reading of 91.
J.C. Penney (JCP) - Get Report slid 13.2% despite a better-than-expected quarter and raised guidance. The retail chain reported a loss of 47 cents a share, 8 cents narrower than expected, while revenue jumped 5% to $2.9 billion and beat by $20 million.
Mylan (MYL) - Get Report shares were more than 9% higher after the drugmaker's deadline to have its $26 billion hostile bid for Perrigo (PRGO) - Get Report accepted passed. Only a small number of shareholders had agreed to exchange their stakes.
Yum! Brands (YUM) - Get Report climbed more than 2% after reporting that same-store sales in China rose 5% in October. The owner of Taco Bell and KFC has suffered weaker sales in the key region after a food safety scandal last year. The restaurant chain owner maintained its fourth-quarter forecasts.
Cisco (CSCO) - Get Report slid 5% after the networking giant issued weaker-than-expected guidance. The company anticipates sales growth of flat to 2% in its current quarter, short estimates of 5% growth. Cisco forecast adjusted earnings of between 53 cents and 55 cents a share, which are below expectations. CEO Chuck Robbins said the lower guidance reflected lower-than-expected order growth and a stronger U.S. dollar.
Applied Materials (AMAT) - Get Report climbed 4% after reporting a 31% increase in profit during its recent quarter. The manufacturer of tools used in semiconductor plants said a smaller income-tax charge helped improve quarterly margins.
Fossil (FOSL) - Get Report shares slumped 14% after disappointing fourth-quarter guidance. The accessories retailer said it expects current-quarter sales down between 16% and 7% and full-year sales down by as much as 10.5%. The company said sales would be "significantly negatively impacted" by a strong U.S. dollar and restructuring costs. Fossil also reached a deal to buy Misfit, a wearable technology company, for $260 million.