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Stock market closes mixed, still ends week higher
13-Sep-19 16:20 ET
Dow +37.07 at 27219.50, Nasdaq -17.75 at 8176.75, S&P -2.18 at 3007.39

https://www.briefing.com/stock-market-update

[BRIEFING.COM] The S&P 500 declined 0.1% on Friday, as losses in crowded areas like technology and real estate offset gains in value-oriented spaces like financials and energy. The Nasdaq Composite lost 0.2%. The Dow Jones Industrial Average (+0.1%) rose for the eighth straight day, and the Russell 2000 (+0.2%) finished the week up 4.9%.

The market entered today on a tear, closing in on record highs amid improved outlooks for trade and growth. Positive-sounding trade news today included China exempting U.S. soybeans and pork from additional tariffs and President Trump acknowledging that he would at least consider an interim trade deal. Mr. Trump, however, said he would prefer a whole deal.

Trade-sensitive groups like the S&P 500 materials (+1.1%) and industrials (+0.5%) sectors showed relative strength while the energy (+0.8%) and financials (+0.8%) sectors capped off an impressive week on a high note. Financial stocks benefited from another rise in yields, and curve-steepening, as Treasuries sold off following an uptick in retail sales and a rebound in consumer sentiment.

Specifically, retail sales increased 0.4% in August (Briefing.com consensus 0.3%). The preliminary reading for the University of Michigan's Index of Consumer Sentiment increased to 92.0 in September (Briefing.com consensus 90.2) from 89.8 in August.

The 2-yr yield increased seven basis points to 1.79%, and the 10-yr yield increased 11 basis points to 1.90%. The U.S. Dollar Index declined 0.1% to 98.20. WTI crude lost 0.5%, or $0.25, to $54.88/bbl.

The news was good, but there wasn't a lot of conviction today after a strong start to September. Weakness in the crowded S&P 500 information technology (-0.7%) and real estate (-1.3%) sectors capped broader gains. Apple (AAPL 218.75, -4.34, -1.9%) and Broadcom (AVGO 290.32, -10.26, -3.4%) were notable laggards.

Apple's price target was cut to $165 from $187 at Goldman Sachs on concerns that its streaming service will adversely affect its income statement. Apple responded, saying the introduction of Apple TV+ will not have a material impact on its financial results, which helped temper selling pressure in the afternoon.

Broadcom said it believes chip demand will remain near bottom levels due to uncertainty in the macro environment. The sobering view overshadowed its earnings beat and helped press pause on the rally in the Philadelphia Semiconductor Index (-0.3%), which is up 39.0% this year.

Reviewing Friday's economic data, which included Retail Sales for August, the University of Michigan's Index of Consumer Sentiment for September, Import and Export Prices, and Business Inventories for July:

Retail sales for August were up 0.4% m/m in August (Briefing.com consensus +0.2%) following an upwardly revised 0.8% increase (from +0.7%) in July. Excluding autos, retail sales were flat (Briefing.com consensus +0.2%) following an unrevised 1.0% increase in July.
The key takeaway from the report is that the softness in sales, excluding autos, isn't as bothersome as it appears given the strength seen in July and given that core retail sales, which exclude autos, gasoline station, building material, and food services and drinking places sales, were up 0.3%.
The preliminary reading for the University of Michigan's Index of Consumer Sentiment was 92.0 (Briefing.com consensus 90.2), up from the final reading of 89.8 for August. The index is down 8.1% from where it stood a year ago (100.1).
The key takeaway from the report is that consumers are starting to worry more about the potential impact of tariffs on the economy, which is a stance that could lead to reduced levels of consumption.
Import prices were down 0.5% m/m in August and were unchanged excluding fuel. Export prices were down 0.6% m/m in August and were down 0.4% excluding agricultural exports.
The key takeaway from this report is that it reveals a lack of inflation pressure on import prices despite the tariff actions, which is running somewhat counter to C-suite commentary. This report is apt to be dismissed, though, since the more influential CPI report, which showed budding inflation pressure for core consumer prices, was released yesterday.
Business inventories increased 0.4% in July (Briefing.com consensus +0.3%) after being unchanged in June.
The key takeaway from the report is that the gap between inventory growth on a yr/yr basis (+4.8%) and sales growth (+1.3%) remains, which should help keep prices in check.

Looking ahead, investors will receive the Empire State Manufacturing Survey for September on Monday.

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