FILE- In this Feb. 5, 2019, file photo trader Michael Urkonis works on the floor of the New York Stock Exchange. The U.S. stock market opens at 9:30 a.m. EST on Thursday, Feb. 14. (AP Photo/Richard Drew, File)

Major US stock indexes waver after weak retail sales data

February 14, 2019 - 2:50 pm

U.S. stock indexes wavered between small gains and losses in late-afternoon trading Thursday, regaining some ground after an early slide. A loss for the benchmark S&P 500 would break a four-day winning streak.

Losses in banks and retailers offset gains in health care stocks, technology companies and elsewhere in the market as investors weighed new reports showing retail sales slumped in December amid a weaker-than-expected holiday shopping season.

The Commerce Department reported that retail sales in December posted their biggest drop since September 2009. Separately, the National Retail Federation issued figures showing U.S. holiday season sales were weaker than expected.

The retail sales reports pulled shares in J.C. Penney and other retailers lower. Those losses were tempered by midafternoon as some economists and analysts questioned whether the government shutdown and resulting delay in collecting the retail sales data had made the results an unreliable barometer of consumer spending in coming months.

Makers of consumer products also took a beating after Coca-Cola said its sales could slow this year because of the strong dollar.

Investors retreated into government bonds, sending benchmark yields lower.

Markets have been moving higher this week as investors became optimistic that new talks could move the U.S. and China closer to a resolution of their trade fight.

The negotiations began Monday, but key figures were set to meet Thursday and Friday in an attempt to avoid an escalation of tariffs that have raised prices for companies and consumers.

The nations are trying to hash out a deal before March 2, when the U.S. has said it would go ahead with penalties on an additional $200 billion of Chinese goods. President Donald Trump has reportedly said he's willing to let that deadline slide if talks go well.

The holiday sales data and ongoing trade woes come at a time that worries about other global economies are deepening. China's economy grew at its slowest pace in three decades last year and Europe is contending with a slowdown in growth. Germany, the biggest economy in Europe, recorded no growth in the fourth quarter, just barely avoiding a recession.

KEEPING SCORE: The Dow Jones Industrial Average fell 37 points, or 0.2 percent, to 25,505 as of 3:33 p.m. Eastern Time. The S&P 500 index dropped less than 0.1 percent, while the Nasdaq composite edged up 0.3 percent. Small-company stocks rose. The Russell 2000 index added 0.4 percent.

More stocks rose than fell on the New York Stock Exchange. Major European indexes finished mostly lower.

Bond prices rose sharply following the weak report on U.S. retail sales. The yield on the 10-year Treasury note fell to 2.66 percent from 2.70 percent late Wednesday. That yield is used to set rates on mortgages and other kinds of loans.

THE QUOTE: While the disappointing retail sales data initially put investors in a selling mood, the sell-off ended up losing steam as traders had some time to reconsider how insightful the data may be about future trends.

"This was a really big shock because it was a 9-year low, in terms of its move, but the market doesn't care what happened two months ago," said Randy Frederick, vice president of trading & derivatives at Charles Schwab. "The market really wants to know what's going on today, and really more importantly what to look for the next month."

RETAIL RUT: Investors got a double-dose of retail data to consider Thursday. The National Retail Federation, the nation's largest retail trade group, said Thursday that holiday sales increased a lower-than-expected 2.9 percent as worries about the trade war with China, the government shutdown and stock market turmoil dampened shopper spending in December.

And the Commerce Department said retail sales fell 1.2 percent in December from the previous month. Total retail sales for 2018 rose 5 percent from the previous year.

Retailers had foreshadowed the results in the new reports earlier this month when they disclosed weak holiday season sales.

J.C. Penney fell 0.4 percent and Amazon shed 1 percent.

FLAT SODA: Coca-Cola slumped 8 percent after the company gave investors a weak outlook as it grapples with rising costs. The beverage giant raised prices in 2018 to counter increasing import and transportation costs.

Coca-Cola said currency fluctuations shaved 10 percent off its fourth quarter profit and it expects a stronger dollar hurt growth in 2019.

LESS TIME: Fossil Group dropped 4.8 percent after reporting a global sales decline. Comparable sales, a key measure for retailers, fell in every region and for every product category. The watchmaker cited economic weakness in several regions, along with reduced discounting and price-matching as key reasons for the weak quarter.

DISASTER IMPACT: A surge in losses from wildfires and hurricanes helped push American International Group to a fourth-quarter loss. The insurer also reported lower investment income in the quarter. The stock lost 8.4 percent.

LESS ACTION: Casino operators broadly fell on concerns that the growth of online gambling could be stunted by a recent U.S. Department of Justice opinion. MGM Resorts CEO Jim Murren, on a call with investors, decried the DOJ's opinion for a broader restriction on interstate gambling. The industry is looking to online gambling and sports betting as key drivers of growth.

MGM fell 6.7 percent, Wynn Resorts dropped 2.6 percent and Las Vegas Sands slid 1.3 percent.

SOLID QUARTER: Cisco Systems gained 2.5 percent after the maker of networking equipment announced a big stock buyback and reported solid demand in its latest quarter.

OIL: U.S. benchmark crude rose 0.9 percent to settle at $54.41 a barrel in New York. Brent crude, the standard for international oil prices, gained 1.5 percent to close at $64.57 a barrel in London.

CURRENCIES: The dollar weakened to 110.51 yen from 110.99 yen on Wednesday. The euro strengthened to $1.1299 from $1.1271.

METALS: Gold slipped 0.1 percent to $1,313.90 an ounce. Silver dropped 0.8 percent to $15.53 an ounce. Copper was little changed at $2.77 a pound.

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