Stocks at Session Lows as Retailers Tumble
Stocks fell to session lows by mid-afternoon Friday as disappointing earnings from retailers weighed on Wall Street.
The S&P 500 was down 0.84%, the Dow Jones Industrial Average slid 1%, and the Nasdaq fell 0.43%.
The first quarter was not a happy one for retailers. J.C. Penney (JCP) - Get Report fell 1.5% Friday after reporting a loss of 22 cents a share, narrower than a year earlier and better than an expected loss of 38 cents. Same-store sales fell 0.4% compared to consensus for 3.2% growth.
Nordstrom (JWN) - Get Report shares fell 13% after a sales decline and higher discounting pressured quarterly profit. First-quarter profit grew an anemic 0.9% and missed estimates, while comparable-store sales declined 1.7%.
Major department store chains Kohl's (KSS) - Get Report and Macy's (M) - Get Report reported a disappointing start to the year in their recent earnings reports.
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Retail sales jumped 1.3% in April, the best reading in a year and above estimates for a 0.9% increase. Core sales, excluding autos and fuel, climbed 0.6%, double the expected increase. April's numbers were a welcome relief after signs the consumer had saved rather than spent in the beginning to the year.
"The tone of this report was unambiguously positive, and the sharp rebound in core spending activity was particularly encouraging, as it suggests that underlying spending momentum may be back on track after the inexplicable stutters earlier this year," Millan Mulraine, deputy chief U.S. macro strategist at TD Securities, wrote in a note. "For the [Federal Reserve], this report will be seen as very encouraging, though it is unlikely to be enough to keep the possibility of a June hike alive."
Consumer sentiment in the U.S. backed up the upward trend in retail sales. Sentiment in early May climbed to 95.8, its highest in nearly a year and far higher than an expected reading of 89.5. Gains in wages and income boosted confidence, pushing the expectations index to a reading of 87.5.
U.S. producer prices climbed 0.2% in April, slightly below expected 0.3% growth. The measure had fallen 0.1% in March. Core prices, minus food, energy and trade, rose 0.3%.
The number of active oil rigs in the U.S. fell for its eight week in a row. The number of active drilling rigs fell by 9 to 406, according to Baker Hughes. Oil rigs fell by 10 to 318.
Good news out from the Organization of the Petroleum Exporting Countries failed to give crude a boost on Friday. The group of major oil-producing countries expects cuts to U.S. production and reduced investments from energy giants will help to rebalance a supply glut this year. Non-OPEC production is expected to fall by 740,000 barrels a day from 2015 to 56.4 million barrels this year, the group said in a monthly report.
Crude prices were lower on Friday after an erratic day of trading a day earlier. West Texas Intermediate crude fell 1.1% to $46.20 a barrel.
PepsiCo (PEP) - Get Report slid nearly 2% after Trian Fund Management disclosed it no longer holds a stake. The firm exited its position in the beverage company before the end of the first quarter.
Shake Shack (SHAK) - Get Report rose 5% after swinging to a profit in its first quarter and hiking its full-year sales outlook. The burger chain reported a 43% surge in revenue, while first-quarter profit of 8 cents a share beat by 3 cents.
Symantec (SYMC) - Get Report posted fiscal fourth-quarter earnings of 22 cents a share, which fell short of analysts' expectations by a penny, and said it was cutting roughly 10% of its workforce as it reorganizes. The security and data security management company also reported a 3% dip in revenue. Shares fell 3%.
