Industrials and S&P creep lower after bout of gains

Slight pessimism creeps into US markets despite week of upbeat corporate earnings and raft of economic data indicating strong economy. Political uncertainty taints bullish market sentiment and brings Dow and S&P lower, while Nasdaq maintains its four-week string of gains.

The Dow slid at close to 20896 falling -0.1% from yesterday. The Index traded narrowly today and fell 110 points (0.5%) from the start of the week. Stock indexes still exhibited steadfastness as investors stayed the course.

Prices

• Dow Jones Index 20896 -0.1%
• S&P 500 2,390 -0.15%
• Nasdaq 6,121.23 +0.09%
• Russell 2000 1382.77 -0.53%
• NYSE Composite 11547.05 0.14%
• Gold 1227.8 +3.6
• Oil 47.82 -0.02

Amongst the daily gainers were Celadon (2.25, +12.50%) and AstraZeneca (34.00, +9.22%),

Consumer inflation remained high but was slowing signalling a potential interest rate increase from the Fed. Retail sales made its strongest gains in three months rising to 0.4% in April.

Macy's New York (Source: Shutterstock.com)

However, retail stocks like JC Penney, Macy’s and Nordstrom suffered after releasing disappointing results, competition from online retailers cited as a key factor and were among the day’s losers.

Macy’s saw a precipitous drop in its quarterly profit of 39%, shares fell -3.04 to 23.61 after a lower-than-expected decline in sales and higher inventory placed pressure on margins.

Nordstrom sank to the bottom of the index -10.84% to 41.20 after missing its quarterly target for same-store sales.

Lacking any seismic shocks the S&P 500 too stayed in slightly negative territory losing just 0.15%.

Wynn Resorts which develops, owns and operates casino resorts climbed +2.50% to 125.29 and digital semiconductor conductivity supplier, Broadcom Ltd rose +2.11% to 235.96.

Nasdaq gained +0.09% to 6,123. TradeDesk Investor Network on positive results closed at 51.90, +30.11% and Biotech NantKwest closed at 3.98 +25.16%.

Weather forecast (Source: Shutterstock.com)

Conditions fair to medium

Economic data showed the US economy is growing. The pace of consumer inflation has slowed.

Morgan Stanley released its Business Condition Index (MSBCI) and Composite which tracks economic conditions and “captures turning points in the economy.”

The report outlined a confident business outlook in May. The MSBCI Composite for May was up a notch to 57 “which is consistent with a moderate pace of economic activity.”

“The increase was driven by mixed underlying details, with somewhat stronger advance bookings, hiring, and inventories, while hiring plans, credit conditions, and business conditions expectations were modestly softer, and capex plans remained steady.”

The Consumer Price Index (CPI) showed annual increases had slowed for the second straight month rising just 0.1% from March (even excluding the more volatile food and energy prices).

The data suggests that a lower CPI combined with the lowest unemployment rates seen in a decade, could provide the Federal Reserve bank enough room to raise interest rates in June.

Jobless claims fell to 236,000 in a sign that there are more jobs being created. In addition, the Labor Department released figures last week showing that the unemployment rate fell to 4.4% a level not seen for a decade.

The White House is to release its budget later this month. Market commentators say if Trump’s initiatives such as proposed tax cuts and infrastructure spending were implemented it could boost GDP growth and push up short-term and long-term interest rates.

The yield on 10-year Treasuries dropped from 2.414 to 2.400 edging government bonds higher. Yields are the inverse of bond prices. Oil breaks a period of loss having crept up to 0.02% to $47.84 a barrel in anticipation of OPEC cutting back production and rise in US shale output.