The S&P 500 index pulled back from its all-time high as the primary engine of the US economy displayed signs of a slowdown, outweighing optimism that the Federal Reserve will hold interest rates steady in September.
A decline in consumer confidence and retail sales, while easing concerns about an imminent rate hike, bodes poorly for US corporations.
The S&P 500 index fell 0.2%, yet still managed to secure its third consecutive weekly gain, the longest such streak since May.
Market sentiment remained calm, with the VIX volatility index dropping to its lowest level since December 29.
Plans to increase economic pressure on Iran pushed the S&P 500 Energy Index to its highest point since March.
The University of Michigan's preliminary August consumer sentiment index fell to 51, below the median estimate of 55 from economists surveyed by Bloomberg. US retail sales in July posted their largest monthly decline in over a year.
Ian Lyngen of BMO Capital Markets commented: "The latest data paints a worrying picture of the overall consumer condition. This will further support the Fed's decision to stand pat next month."
Bret Kenwell of eToro noted that one month of weak spending does not necessarily signal a sharp economic deterioration, but combined with disappointing employment data, it becomes harder to dismiss.
However, some analysts cautioned that the data may have been skewed by the timing of purchases, as Amazon moved its Prime Day promotional event from July to June this year.
Chris Zaccarelli of Northlight Asset Management stated that the US economy is highly reliant on consumer spending, and a significant slowdown in consumption could ultimately harm corporate profits and the stock market.
The Chicago Fed president expressed encouragement from recent cooling inflation data but indicated a desire to see more similar evidence in the coming months.
At the close of trading, the S&P 500 index fell 0.2% to 7,785.76 points;
The Dow Jones Industrial Average declined 0.2% to 53,732.41 points;
The Nasdaq Composite Index dropped 0.3% to 26,729.16 points;
The Nasdaq 100 Index slipped 0.1% to 30,046.14 points;
The Russell 2000 Index rose 0.5% to 3,068.415 points.
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