The S&P 500 moved off session lows Thursday, but remained under pressure as an unexpected rise in monthly retail sales stoked concerns that the Federal Reserve could tighten policy sooner rather than later.
The S&P 500 fell 0.2%, the Dow Jones Industrial Average slipped 0.2%, or 73 points, the Nasdaq was flat.
“[T]he Treasury curve bear steepened and the S&P500 fell presumably on the good news is bad for Fed expectations logic,” Scotiabank said in a note.
The Commerce Department said Thursday that retail sales rose 0.7% last month. That confounded economists’ forecast for a 0.8% decline. The retail sales control group – which has a larger impact on U.S. GDP – climbed 2.5% topping expectations for a 0.1% decrease.
“Retail sales rebounded in August, despite sizable drag from auto sales. Outside of autos, sales posted broad-based increases, with particular strength in online sales, general merchandise and furniture sales,” Jefferies (NYSE:JEF) said in a note.
The U.S. Department of Labor reported initial jobless claims increased by 20,000 to 332,000 in the week ended Sept. 11, missing forecasts for a 18,000 decline.
The positive economic data failed to spur cyclical corners of the market as energy and materials were the worst performing sectors on the day.
Newmont Goldcorp Corp (NYSE:NEM), Martin Marietta Materials (NYSE:MLM), and Freeport-McMoran Copper & Gold (NYSE:FCX), were the worst performers in materials, with the latter down more than 6%.
Freeport-McMoran Copper & Gold Inc (NYSE:FCX) deepens its losses amid an ongoing decline in copper prices as tailwinds including stimulus and inflation concerns are expected to fade.
Energy, meanwhile, gave back some its recent gains even as oil prices cut its losses.
Tech stocks struggled to rack up gains as the positive economic data lifted Treasury yields.
Google-parent Alphabet (NASDAQ:GOOGL), Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB), and Microsoft (NASDAQ:MSFT), were in the red.
In other news, Beyond Meat (NASDAQ:BYND) fell 4% after Piper Sandler downgraded the stock to underweight from neutral, and cut its price target on the stock to $95 from $120, citing expectations for slowing sales ahead.