Wall Street Stocks Slide After Weak Retail Sales Data

18 Aug 2021 · 3rd Party Analysis

Wall Street Stocks Slide After Weak Retail Sales Data

WRITTEN BY ThorFX

In Summary

  • Wall Street equities finish Tuesday lower, pressured by weaker-than-expected retail sales data
  • US futures float near the flat line as traders and investors expect Fed meeting minutes today

Major stock indexes in the US declined on Tuesday after disappointing retail sales data and renewed Covid-19 jitters dampened investor optimism. Retreating from a five-day record-setting rally, both the Dow Jones Industrial Average and the S&P500 tumbled, along with the Nasdaq Composite.

The broad S&P500 erased 31.73 points, or 0.71%, to finish the session at 4,448.08. The 30-stock Dow Jones closed down 282.12 points, or 0.79%, to end the day at 35,343.28. Earlier in the session, the Dow slipped more than 500 points. The Nasdaq Composite dropped 137.58 points, or 0.93%, to 14,656.18.

The tech-heavy index was pressured for another day as reopening trades have been at the forefront of the recent run to new highs. Technology giants like Facebook and Amazon lost 2.2% and 1.7%, respectively.

Tesla shares dropped roughly 3%, or $20.46, to $665.71 per share. The EV maker’s losses added to a weak Monday performance when the company lost more than 4%, dragged lower by a probe into its autopilot system. Apple and Microsoft lost about half a percent each.

Retail Spending Declines in the US

As all three stock benchmarks pulled back on Tuesday, the spread of Covid-19 and weak retail sales data suggested the economic expansion could be coming into a slowdown. Data from the Commerce Department released yesterday showed that spending in the US retail sector has decelerated sharply in July. Retail sales, an indicator for purchases at stores, restaurants, and online, dropped 1.1% in July, from a month earlier. The fall was steeper than the expected decline of 0.3%.

Shares of companies in the retail industry tumbled, along with cyclical companies. Home Depot, a large retailer, fell $14.30, or 4.3%, to finish the day at $320.75. Lowe’s erased $11.22, or 5.8%, to end at $182.26. The company is expected to release its earnings report today.

Beyond this week’s economic data, the retail sales report released yesterday, and the initial jobless claims expected Thursday, investors will be waiting to know the latest from the Federal Reserve. The US central bank will publish today its minutes from the Fed policy meeting held three weeks ago.

Fed officials have begun discussions about scaling back its expansive monetary policies that have stimulated the US economy since the initial phase of the pandemic. In the meeting summary, market participants will be seeking any hints that would suggest a timeline for potential tapering.

In previous speeches, Federal Reserve Chairman Jerome Powell has multiple times reiterated the process of tapering will be announced way in advance so that the market could be prepared when the stimulus is cut.

Ahead of the meeting minutes release, US futures are little changed to slightly negative.

In overseas stock market action, European bourses today opened slightly to the upside, following a rather noneventful session yesterday. The Stoxx Europe 600 is now hovering moderately above its opening level, near 474 points. On Tuesday, markets across Europe were mostly lower as investors tried to navigate

through resurfaced Covid-19 concerns. The region-wide Stoxx 600 ended yesterday’s session mildly higher by 0.07% to 473.78.

Bitcoin today is trading sideways after two straight days of losses. After making a weekly low earlier in the session, bitcoin’s price is now at $45,100 per coin. Ether has moved moderately lower on the day, currently trading near $3,030.

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