By Sue Chang and Chris Matthews, MarketWatch
Retail sales in April slide 0.2%
U.S. stocks closed higher Wednesday amid developments in U.S.
international trade relations that were being viewed as optimistic
by investors who have become increasingly sensitive to tariff
headlines.
The market's gains were broad with shares of internet-related
and information technology companies underpinning the rebound.
How did the major indexes fare?
The Dow Jones Industrial Average rose 115.97 points, or 0.5%, to
25,648.02 and the S&P 500 index gained 16.55 points, or 0.6%,
to 2,850.96. The tech-heavy Nasdaq Composite Index outperformed its
peers, advancing 87.65 points, or 1.1%, to 7,822.15.
Communication services and information technology were the big
winners while financials, materials and utilities ended lower.
What drove the market?
The Trump administration plans to delay a decision on
instituting new tariffs on car and auto part imports for up to six
months, according to media reports
(https://www.cnbc.com/2019/05/15/trump-administration-to-delay-auto-tariffs-amid-trade-war.html).
The news helped stocks to recover from early-morning losses and
gain a foothold in positive territory.
The Commerce Department had submitted a report to the White
House
(http://www.marketwatch.com/story/commerce-department-report-backing-25-tariffs-on-auto-imports-could-hit-sunday-2019-02-15)
in February that gave the president the authority to impose new
duties on car imports on national security grounds, with a deadline
of May 18, but the president has the authority to delay the
decision for another 180 days.
President Donald Trump has long complained about the relative
popularity of Japanese and European cars among American consumers,
and has threatened tariffs as a means of getting the EU and Japan
to agree to concessions in future trade negotiations.
The news potentially offsets worries that a worsening U.S.-China
trade conflict would be aggravated by spats with other major trade
partners like the EU at the same time that Congress is considering
whether or not to ratify the Trump administration's
U.S.-Mexico-Canada trade pact, which, if passed, would replace
Nafta as the treaty governing North American trade.
CNBC reported Wednesday that House Speaker Nancy Pelosi will
meet with U.S. Trade Representative Robert Lighthizer
(https://www.cnbc.com/2019/05/15/pelosi-to-meet-with-trump-trade-rep-lighthizer-about-usmca-and-china.html)
to discuss the deal among other trade-related topics.
Trump on Tuesday also appeared to soften his rhetoric around
trade, calling the dispute with China a "squabble" and repeating
expectations for a positive meeting with Chinese leader Xi Jinping
next month in Japan.
Disappointing data on U.S. retail sales helped to reinforce
jitters about slowing domestic growth amid fears over the frayed
relationship between Beijing and Washington that escalated last
week after the Trump administration allowed tariffs on $200 billion
of Chinese goods to increase to 25% from 10% and prepared further
duties on a range of other goods.
Meanwhile, China's economic activity cooled
(http://www.marketwatch.com/story/chinas-economic-activity-cools-in-april-2019-05-14)
last month, with data released Wednesday showing a slowing in
factory production, investment and retail sales.
What economic data were in focus?
Retail sales figures for April showed that U.S. retailers are
seeing decelerating purchases for a second time in three months,
declining 0.2% last month, compared with expectations for a 0.1%
increase, per a MarketWatch poll of economists. Excluding autos,
retail sales were flat for the month, versus expectations for 0.7%
growth.
Though the letup follows a surprisingly strong 1.7% surge in
retail sales in March, the broader trend in consumer spending
reflects a slowing economy despite a health labor market.
Read:Why the stock market is at the mercy of the U.S. consumer
(http://www.marketwatch.com/story/why-the-stock-market-is-at-the-mercy-of-the-us-consumer-2019-05-11)
The Empire State manufacturing survey in May climbed to a
six-month high of 17.8 from a reading of 10.1 in April, the New
York Fed announced
(http://www.marketwatch.com/story/empire-state-manufacturing-index-climbs-to-six-month-high-in-may-2019-05-15).
Industrial production fell 0.5% in April. Economists polled by
MarketWatch expected a 0.1% drop for production and a decline in
utilization fell to 78.6%.
The National Association of Home Builders' monthly confidence
index jumped three points to 66 in May, the trade group said
Wednesday
(http://www.marketwatch.com/amp/story/guid/8349F4F0-7321-11E9-BFD5-1F1CC48B2404);
the highest reading since October.
What were analysts saying?
"The 0.2% [monthly] decline in retail sales in April was weaker
than the consensus expectation of a small gain and supports our
view that GDP growth is set to slow in the second quarter," wrote
Andrew Hunter, senior U.S. economist with Capital Economics, in a
research note.
"With Donald Trump playing down trade tensions between the U.S.
and China as a 'little squabble,' there is cautious optimism that
both sides will eventually reach a trade deal, with investors
potentially looking at the G-20 meeting in Japan next month as a
possible target for a breakthrough in trade relations," said Han
Tan, market analyst at FXTM, in a report.
Which stocks were in focus?
Shares of Ford Motor Co. (F) gained 1.2% and General Motors Co.
(GM) shares rose 0.9% following reports about the tariff delay.
Shares of Macy's Inc. (M) fell 0.5% after the retailer beat
analyst estimates for first-quarter profits
(http://www.marketwatch.com/story/macys-shares-jump-after-earnings-blow-past-estimates-2019-05-15),
but reported falling revenue that was shy of expectations.
Alibaba Group Holding Ltd. (BABA) stock rose 1.6% after the
China-based e-commerce giant reported fiscal fourth-quarter
earnings and revenue that exceeded expectations.
How did other markets trade?
Asian markets closed mostly higher
(http://www.marketwatch.com/story/asian-markets-mostly-rise-following-wall-streets-lead-2019-05-14),
as Japan's Nikkei 225 rose 0.6%, Hong Kong's Hang Seng Index added
0.5%, while the Shanghai Composite advanced 1.9%. In Europe, stocks
edged higher
(http://www.marketwatch.com/story/receding-chinese-economy-weighs-on-european-markets-2019-05-15),
as reflected by a 0.5% advance for the Stoxx Europe 600 .
Crude oil prices advanced, while gold settled slightly higher
and the U.S. dollar traded mostly flat
(http://www.marketwatch.com/story/chinas-yuan-nearing-fresh-2019-low-after-weaker-than-expected-economic-data-2019-05-15).
--William Watts contributed to this article
(END) Dow Jones Newswires
May 15, 2019 16:23 ET (20:23 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.