NEW YORK (TheStreet) -- With strong retail sales numbers out Friday and an upbeat print on consumer sentiment, the markets were on the lookout for a hawkish move by Federal Reserve officials when they meet next week. As rate hike expectations flared up Friday, the S&P 500 (^GSPC) dove near session lows to snap five consecutive weeks of gains.
The 10-year Treasury yield made a pronounced move, rising above 2.6% while the SPDR Gold Trust (GLD) - Get Report GLD lost 0.91% to $118.38 as investors priced in expectations of the Fed's first rate hike taking place in the first quarter of 2015.
Retail sales jumped by an as-expected 0.6% in August, and July's previously flat retail sales reading was upwardly revised to a 0.3% increase, the Census Bureau reported. The report was the most important data point of the week since last week's tepid job report.
"The strong retail sales report will allay one crucial concern at the Fed about the soggy spending performance to start the quarter, thereby increasing the Fed's confidence about the recovery," said Millan Mulraine, deputy head of U.S. research and strategy at TD Securities. Mulraine said there's a high possibility this will raise the odds of the "considerable time" reference regarding keeping rates low being removed at next week's meeting.
In other economic data, the University of Michigan Consumer Sentiment index jumped to a higher-than-expected 84.6 in September.
In widely watched corporate news, Darden Restaurants(DRI) - Get Report was down 1.47% to $47.58 after swinging to a quarterly loss of 14 cents a share as U.S. same-store sales dropped 1.3% at its struggling Olive Garden chain. Activist shareholder StarboardValue has laid out a detailed transformation plan for Darden that it said could unlock $19 to $38 a share in value, and includes a turnaround strategy for Olive Garden.
Alibaba will begin closing the order books for its $21 billion initial public offering on Tuesday after receiving enough demand to cover the deal during the first week of the roadshow, the Financial Times reported. With its 22% stake in the Chinese ecommerce giant and plan to sell 121.7 million shares in the upcoming IPO, Yahoo! jumped 3.93% to $42.88.
Apple(AAPL) - Get Report was up 0.23% to $101.66 after its online store experienced a few hiccups Friday amid the enormous demand for its new iPhone 6 Plus. The Apple Store Web site said pre-orders for the devices won't be shipping until next month. "Response to iPhone 6 and iPhone 6 Plus has been incredible, with a record number of pre-orders overnight," Apple told TheStreet.
Alliance Data Systems(ADS) - Get Report , which manages credit cards and loyalty programs for retailers, agreed to buy digital marketing company Conversant (CNVR) for about $2.3 billion. Conversant soared 30.29% to $34.80 while Alliance Data advanced 1.99% to $257.91.
-- By Andrea Tse in New York