Retail Segment Keeps Pressure on U.S. Stock ETFs
U.S. equities and stock exchange traded funds were flat Thursday as traders soured on the outlook for brick-and-mortar shops.
The S&P 500 Index, along with related funds including the SPDR S&P 500 ETF (SPY) , iShares Core S&P 500 ETF (IVV) and Vanguard 500 Index (VOO) , were relatively unchanged Thursday.
Weighing on the markets, consumer discretionary companies in the S&P 500 fell 0.3%.
While Sears (SHLD) shares jumped 9.1% Thursday after the retailer said it would sell its Kenmore home appliances on Amazon (AMZN) and integrate the brand’s smart gadgets with the e-commerce giant’s Alexa assistant.
However, the deal was a blow to competing brick-and-mortar shops as traders interpreted the sale as part of an ongoing shift toward online or greater e-commerce in an increasingly digital age.
Meanwhile, the overall upbeat second quarter earnings results continue to support U.S. markets, especially with the ongoing rally in technology shares . Analysts expect an 8.6% rise in second-quarter earnings and a 4.6% increase in revenue for the S&P 500 year-over-year, Reuters reports.
“Earnings are going to surprise to the upside and so far it’s been good,” Brent Schutte, chief investment strategist for Northwestern Mutual Wealth Management Company, told Reuters. “I think the one thing that’s changed is now we’re getting revenue growth because in many cases the world is doing better. That’s the big change to the economy over the past year and that’s what will keep the fire burning in the future.”
Related: Strong Corporate Earnings Help Push U.S. Stock ETFs to New Heights
U.S. markets also remained resilient despite a flareup associated with political risk earlier in the morning. Markets briefly dipped in early Thursday on news of an investigation into ties between President Donald Trump’s campaign and Russia in last year’s election may have extended into Trump’s businesses, the Wall Street Journal reports.
“At this point, the market is viewed as so frothy, it’s definitely a sell first and sort it out later mentality,” Justin Wiggs, managing director in equity trading at Stifel Nicolaus, told the WSJ.
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