Weak retail sales and wholesale prices dragged benchmarks mostly lower on Friday. The Dow and the S&P 500 closed in the red, with the materials sector declining the most after the EU opened an antitrust probe on Dow Chemical and DuPont merger. The Nasdaq, on the other hand, finished at its fourth high of the year, banking on chipmaker NVIDIA's stellar quarterly results.
All the three major indexes eked out gains for the week, with all of them hitting record highs on Thursday, which didn't happen since Dec 31, 1999. Except for Thursday, stocks traded in a very narrow range, with volatility remaining near multi-year lows.
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The Dow Jones Industrial Average (DJI) decreased 0.2%, to close at 18,576.47. The S&P 500 declined 0.1% to close at 2,184.05. The tech-laden Nasdaq Composite Index closed at 5,232.90, gaining 0.1%. The fear-gauge CBOE Volatility Index (VIX) decreased 1.1% to settle at 11.55. A total of around 5.6 billion shares were traded on Friday, lower than the last 20-session average of 6.4 billion shares. Decliners outpaced advancing stocks on the NYSE. For 50% stocks that declined, 46% advanced.
Weaker-than-expected retail sales numbers dented investors' sentiment. According to the Commerce Department, sales at retailers and restaurants remained unchanged at $457.73 billion last month from the prior month. The consensus estimated growth of 0.4%. Retails sales numbers were unexpectedly flat as consumers cut back on purchasing clothes and other goods.
Autos and e-commerce were the only bright spots in July retail sales. Sales at auto and parts dealers increased 1.1% in July, the strongest result since April. Nonstore retailers also posted gains of 1.3%, a category that mostly consists of online merchants such as Amazon.com, Inc. ( AMZN ). However, excluding autos, retail sales fell 0.3% last month, the weakest reading since January.
Investors also grappled with an unexpected drop in wholesale prices. According to a government report, U.S. wholesale prices dropped 0.4% in July from the prior month, its biggest drop since Sept 2015. This was also the first drop in four months, with both food and energy prices tanking. Excluding the volatile food and energy prices, core prices were flat in July.
Meanwhile, the European Union's (EU) antitrust authority opened an investigation on the proposed merger between The Dow Chemical Company ( DOW ) and E. I. du Pont de Nemours and Company ( DD ). The EU said that they will investigate whether the proposed merger deal of about $122 billion could trim competition in crop protection, seeds and petrochemicals. Shares of Dow Chemical and DuPont fell 0.2% and 1.9%.
The Materials Select Sector SPDR ETF (XLB) decreased 1.1%, the highest among the S&P 500 sectors. Key components from materials sector including Owens-Illinois, Inc. ( OI ), Freeport-McMoRan Inc. ( FCX ), Nucor Corporation ( NUE ) and LyondellBasell Industries N.V. ( LYB ) fell 1.9%, 2.4%, 3.2% and 0.6%, respectively.
The Nasdaq, however, ended in the green after the maker of graphics chips NVIDIA Corporation ( NVDA ) posted better-than-expected earnings. The company's second quarter earnings per share of 44 cents beat the Zacks Consensus Estimate of 37 cents. Revenues of $1.428 billion also surpassed the Zacks Consensus Estimate of $1.355 billion. Shares of NVIDIA climbed 5.6%.
For the week, both the Dow and the Nasdaq rose 0.2%, while the S&P 500 edged up less than 0.1%. Rise in oil prices helped benchmarks finish in the green for the week. Saudi Arabia's Energy Minister Kahlid al-Falih showed willingness to talk with major crude-oil producers to limit oil production, which eventually boosted oil prices. The WTI crude posted its largest weekly gain in about four months on Friday. Separately, better-than-expected earnings results from retailers like Macy's Inc ( M ) and Kohl's Corporation ( KSS ) had a positive impact on the broader markets.