Solid Retail Sales Not Enough For Stocks Friday

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Stocks were pressured Friday, even as retail sales for May surged. A continued spike in virus cases held back sentiment and new rules capping shareholder returns at banks saw financials lead the down-market. 

All three major U.S. indices were pressured, with the S&P 500 down as much as 0.81%. The 10-Year Treasury yield slipped to 0.66%. Yields fall when prices rise. Tech stocks were pressured, as the Nasdaq fell 0.89%. Some growth tech stocks are trading at expensive valuations and are taking a pause, but cyclical value more than participated in the down market. 

Positively, retail sales rose 8.2% for the month of May, showing that, excluding the return of lockdowns, the economic recovery is well underway. Retail stocks did rise, with the VanEck Vectors Retail ETF  (RTH) - Get Report up 0.4%, showing that investors aren’t overly concerned about the virus Friday, though it remains an overhang. The S&P 500 Equal Weight Consumer Discretionary Index rose 0.2%. 

Nike  (NKE) - Get Report did fall 3.5% after missing revenue badly, posting a net loss and offering no guidance. It had run-up substantially in the weeks leading up to earnings. 

But investors await more fiscal stimulus, as ongoing federal reserve stimulus is priced into the market and flowing through the economic system. Meanwhile, lockdowns are a threat. Daily new coronavirus cases is at a 5-day moving average of 39,000, a record, according to Johns Hopkins data. 

Large cap banks lead the market down after the Federal Reserve said it concluded after its stress test that banks will cap dividend payments for the third quarter and suspend she repurchases. Goldman Sachs  (GS) - Get Report and Bank of America  (BAC) - Get Report fell 5.6% and 3.9%, respectively. 

Oil stocks also fell 2%. 

This week, as risk assets were pressured, $7.2 billion flowed out of equities, according to Bank of America Global Research and $14.1 billion flowed into investment grade bonds. 

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