Tuesday August 17th


Dow futures fall more than 150 points as July retail sales decline

U.S. stock index futures fell on Tuesday as July retail sales declined, another sign the economy may be slowing a bit in the face of a Covid resurgence. To be sure, Tuesday’s losses were slight and the Dow Jones Industrial Average and S&P 500 closed at records Monday. Futures contracts tied to the Dow Jones Industrial Average fell 175 points, or 0.5%. S&P 500 futures shed 0.4% and Nasdaq 100 futures lost 0.5%. Retail sales declined 1.1% in July, a steeper drop than the 0.3% dip expected by economists surveyed by Dow Jones. The Census Bureau revised June’s reading to a 0.7% jump. Dow member Home Depot fell roughly 3% in premarket trading after reporting second-quarter results, knocking futures. While quarterly earnings topped estimates, same-store sales rose 4.5% in the period, below the 5% consensus estimate of analysts polled by StreetAccount. U.S. same store sales increased by just 3.4%. Walmart shares ebbed lower, then edged higher in the premarket after second-quarter earnings topped estimates. The retailer issued cautious guidance; the company said it will earn between $1.30 and $1.40 a share this quarter while the consensus analyst estimate is $1.32, according to StreetAccount. The Dow and the S&P 500 closed at record highs Monday in their fifth straight positive session. The indexes clawed back early losses to rise 0.31% and 0.26%, respectively. The Nasdaq Composite, however, declined 0.2% to close in the red. The S&P 500′s move during Monday’s session marked a milestone as the benchmark index doubled from its pandemic closing low on March 23, 2020. This marks the fastest bull-market doubling since World War II, according to calculations from CNBC. Stocks have recovered from their pandemic lows at a blistering rate, and some on Wall Street see more gains ahead. “We remain bullish on stocks (particularly cyclicals/value) thanks to a strong earnings season, signs of receding risk from the delta variant, and normalization of bond-equity correlation,” JPMorgan wrote in a note to clients Monday. Monday’s action came despite disappointing economic data from China. The nation’s retail sales were up 8.5% year over year during July, which was short of the 11.5% jump economists polled by Reuters were expecting. Goldman Sachs noted that the impacts would likely be localized. “Rising COVID case growth is likely fueling the slowdown seen in China and the decline in manufacturing sentiment, but the economic impact — at least in the US and Europe — is unlikely to be big,” the firm said Monday in a note to clients. Shares in Asia-Pacific declined on Tuesday, with Chinese internet stocks in Hong Kong falling again as regulatory fears resurfaced. By the Tuesday market close in Hong Kong, shares of Tencent dropped 4.14% while Alibaba plunged 4.77% and JD.com slipped 5.16%. The Hang Seng Tech index slipped 3.13% to 6,218.89. Those losses came after China’s market regulator issued draft rules on Tuesday aimed at stopping unfair competition on the internet. Hong Kong’s broader Hang Seng index fell 1.66% to 25,745.87. Mainland Chinese stocks led losses regionally by their Tuesday close, with the Shanghai composite slipping 2% to 3,446.98 while the Shenzhen component dropped 2.335% to 14,350.65. In Japan, the Nikkei 225 closed 0.36% lower at 27,424.47 while the Topix index declined 0.49% to finish the trading day at 1,915.63. South Korea’s Kospi declined 0.89% to close at 3,143.09. Oil prices rose on Tuesday, recovering from the previous day’s losses, as investors sought bargains and on expectations that major producers will not boost supply soon, though fears of weaker global demand amid surging pandemic capped gains. Brent crude was up 13 cents, or 0.2%, at $69.64 a barrel by 0055 GMT, after falling 1.5% on Monday. U.S. oil climbed by 14 cents, or 0.2%, to $67.43 a barrel, having lost 1.7% the previous day. Gold extended its winning streak to a fifth session on Tuesday, supported by a drop in U.S. bond yields and worries that a spike in the COVID-19 Delta variant cases could hinder a recovery in the global economy. Spot gold was up 0.4% at $1,793.85 per ounce by 0906 GMT, after hitting a peak since Aug. 6 in the session. U.S. gold futures rose 0.4% to $1,796.