The S&P 500 and the Dow closed lower on Friday, dragged down by declines in bank and retail stocks. Weaker than expected monthly inflation data raised concerns about the possibility of a future rate hike, which eventually affected banks. Brick-and-Mortar retailers, on the hand, took a beating after JC Penny reported lower-than-expected comparable sales stores. Meanwhile, the Nasdaq not only managed to end in the green on Friday but also ended the week higher. But, the S&P 500 and the Dow closed in negative territory for the week after Comey’s dismissal raised doubts whether Trump will be able to implement his promised business-friendly policies.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.
The Dow Jones Industrial Average (DJI) declined 0.1% to close at 20,896.61. The S&P 500 fell 0.2% to close at 2,390.90. As per the Dow Jones Data Group, the S&P 500 moved less than 0.5% for the thirteenth straight session, marking the longest streak since September 1995.The tech-laden Nasdaq Composite Index advanced 0.1% to close at 6,121.23. A total of around 6.1 billion shares were traded on Friday, lower than the last 20-session average of 6.8 billion shares. Decliners outnumbered advancing stocks on the NYSE by a 1.32 to 1 ratio.
Bank Stocks Dragged Down By Weak Inflation Data
According to the U.S. Bureau of Labor Statistics, the Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2% on a seasonally adjusted basis in April. Indexes for shelter, energy, tobacco, and food increased whereas indexes for wireless phone services, medical care, motor vehicle insurance, apparel, used cars and trucks, recreation, and new vehicles recorded a decline. Consumer prices rose unadjusted 2.2% over last year, a decline from a 2.4% increase in March.
However, the core CPI in April, recorded an increase of 0.1%, reversing a 0.1% decline in the previous month. However, the rise in the core reading fell short of an estimated 0.2% increase.
Lower than expected monthly inflation data raised questions among investors about whether the central bank could achieve its interest rates target this year which ultimately had an adverse impact on the bank stocks.
The broader Financials Select Sector SPDR (XLF) declined 0.4%, emerging as one of the worst performing sector of S&P 500. Some of the key holdings of the financial sector in the S&P 500 including Wells Fargo & Co WFC and Goldman Sachs Group Inc GS fell by 1.3% and 0.9% respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
J.C. Penney Shares Drop
The earnings focus has been on the Retail sector, with J.C. Penney JCP becoming the latest department store to follow the lead set by Macy’s M, Kohl’s KSS and Nordstrom JWN. J.C. Penney shares declined 14% after the company reported its quarterly earnings results that showed disappointing same-store sales.
The company reported first-quarter fiscal 2017 adjusted earnings per share of $0.06, outperforming the Zacks Consensus Estimate of a loss of $0.22. However, the company generated total net sales of $2,706 million that decreased 3.7% year over year, and also fell short of the Zacks Consensus Estimate of $2,762 million. Comparable sales declined 3.5% in the quarter.
Weak performances from J.C. Penney had a negative impact on investors’ sentiment, which ultimately had an adverse impact on the Brick-and-Mortar retailers.
Retail Sales Increase
As per the Commerce Department, U.S. retail and food services sales for April 2017, adjusted for seasonal variation and holiday and trading-day differences, recorded an increase of 0.4% from the previous month. April retail sales were $474.9 billion, an increase of 4.5% from April 2016.
Gasoline Stations sales recorded an increase of 12.3% from April 2016, while Nonstore Retailers rose 11.9% from last year. Although, retail sales increased in April, but it came below the 0.6% rise that had been estimated.
For the week, the Nasdaq gained 0.3%, marking its fourth straight weekly advance. On the other hand, Dow declined 0.5% and the S&P 500 fell 0.4%. On Tuesday, Trump discharged Director of the Federal Bureau of Investigation (FBI), James Comey from office. Comey was accused of injudiciously commenting that “hundreds and thousands” of Clinton’s emails were forwarded by Clinton aide Huma Abedin to former Rep. Anthony Weiner’s personal computer. Investors remained worried that such a dismissal could delay implementation of Trump administration’s pro-growth agenda including corporate tax reform, deregulation and infrastructure policies.
Meanwhile, Emmanuel Macron’s victory in the French presidential election helped to alleviate geopolitical concerns over France’s possible exit from the European Union.
Stocks that made Headlines
Anthem Finally Walks Away from Cigna Merger, Seeks Charges
Anthem Inc. ANTM has officially terminated its merger with Cigna Corp. CI. (Read More)
Petrobras Q1 Earnings Buoyed by Higher Oil, Cost Cuts
Brazil's state-run energy giant Petroleo Brasileiro S.A., or Petrobras PBR announced first quarter net income of $1,417 million or 11 cents per share, compared with a loss of $318 million or 2 cents in the year-earlier quarter. (Read More)
CyberArk Tops Q1 Earnings, Stock Dips on Soft View
Keeping its earnings streak alive for the 11th consecutive quarter, CyberArk Software Ltd. CYBR reported better-than-expected first-quarter 2017 results. (Read More)
5 Trades Could Profit "Big-League" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Wells Fargo & Company (WFC): Free Stock Analysis Report
CyberArk Software Ltd. (CYBR): Free Stock Analysis Report
Petroleo Brasileiro S.A.- Petrobras (PBR): Free Stock Analysis Report
Goldman Sachs Group, Inc. (The) (GS): Free Stock Analysis Report
Cigna Corporation (CI): Free Stock Analysis Report
Anthem, Inc. (ANTM): Free Stock Analysis Report
Nordstrom, Inc. (JWN): Free Stock Analysis Report
Macy's Inc (M): Free Stock Analysis Report
J.C. Penney Company, Inc. Holding Company (JCP): Free Stock Analysis Report
Kohl's Corporation (KSS): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research