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End of Day Brief - Friday July 16 - Stocks drops to end the week

SP 5004327.16-32.87(-0.75%)
10-yr Note -22/321.300
NYSEAdv 957 Dec 2306 Vol 961.0 mln
NasdaqAdv 1327 Dec 2913 Vol 4.0 bln

Industry Watch

Strong: Utilities, Real Estate, Consumer Staples, Health Care
Weak: Energy, Materials, Financials, Consumer Discretionary

Moving the Market

-- Market fades opening gains and closes lower

-- Consumer sentiment declines in July, according to prelim UofM Index

-- June retail sales report was better than expected

-- Relative weakness in cyclical stocks

Market closes lower

Dow -299.17 at 34687.85, Nasdaq -115.90 at 14427.23, S&P -32.87 at 4327.16

[BRIEFING.COM] The S&P 500 fell 0.8% on Friday, as the market faded a positive start driven by the cyclical stocks and reverted to a defensive posture. The Nasdaq Composite (-0.8%), Dow Jones Industrial Average (-0.9%), and Russell 2000 (-1.2%) struggled alongside the benchmark index.

The opening gains ranged from 0.3% (Dow) to 0.9% (Russell 2000) after data showed total retail sales increase 0.6% m/m in June ( consensus -0.6%). The Dow also came within two points of its all-time high.

Cyclical stocks quickly turned around, as did small-caps, on no specific catalyst, although a disappointing read on consumer sentiment appeared to reinforce the selling. The preliminary July reading for the University of Michigan Index of Consumer Sentiment slipped to 80.8 ( consensus 86.3) from 85.5 in June.

The S&P 500 energy (-2.8%), materials (-1.5%), financials (-1.3%), and consumer discretionary (-1.3%) sectors piled on the losses into the close while the defensive-oriented utilities (+1.0%), consumer staples (+0.2%), real estate (+0.1%), and health care (+0.2%) sectors closed higher.

The Treasury market, meanwhile, continued to pressure the bank stocks -- the SPDR S&P Bank ETF ($KBE 48.90, -1.26, -2.5%) dropped 2.5% -- while working in favor of those defensive sectors with relatively high dividend yields.

The 10-yr yield settled unchanged at 1.30%, even as consumers' expectations on inflation kept rising, according to the consumer sentiment report. The 10-yr yield touched 1.34% following the retail sales report. This remained well below the dividend yields of the real estate, utilities, and consumer staples sectors.

Charles Schwab ($SCHW 68.89, -1.66, -2.4%) didn't help its own cause with a mixed earnings report, but State Street ($STT 84.35, +2.38, +2.9%) did with better-than-expected quarterly results. Dow Inc. ($DOW 60.01, -1.90, -3.1%) was downgraded to Underperform from Neutral at BofA Securities.

Separately, Moderna ($MRNA 286.4., +26.75, +10.3%) jumped 10% on news it will join the S&P 500 on July 21. Intel ($INTC 54.97, -0.84, -1.5%) is reportedly in talks to acquire GlobalFoundries for $30 billion.

The 2-yr yield was unchanged at 0.23%. The U.S. Dollar Index increased 0.1% to 92.71. WTI crude futures increased 0.1%, or $0.10, to $71.76/BBL.

Reviewing Friday's economic data, which featured the Retail Sales report for June:

  • Total retail sales, weighed down by a 2.0% decline in motor vehicle and parts dealers sales, still increased 0.6% month-over-month ( consensus -0.6%) following a downwardly revised 1.7% decline (from -1.3%) in May. Excluding autos, retail sales jumped 1.3% month-over-month ( consensus +0.3%) following a downwardly revised 0.9% decline (from -0.7%) in May.
    • The key takeaway from the report is the stronger-than-expected read for the ex-auto figure, which reflects the unleashing of pent-up demand on the part of consumers flush with cash and a desire to leave their house.
  • The preliminary July reading for the University of Michigan Index of Consumer Sentiment slipped to 80.8 ( consensus 86.3) from the final reading of 85.5 for June. This is the lowest reading since February and compares to the 99.3 reading seen in July 2020.
    • The key takeaway from the report is the understanding that consumer sentiment declined as consumers' inflation expectations rose.
  • Business inventories increased 0.5% m/m in May ( consensus +0.4%) following an upwardly revised 0.1% increase (from -0.2%) in April.

Looking ahead, investors will receive the NAHB Housing Market Index for July on Monday.

  • S&P 500 +15.2% YTD
  • Dow Jones Industrial Average +13.3% YTD
  • Nasdaq Composite +11.9% YTD
  • Russell 2000 +9.5% YTD

Source: (

Disclosure: I may trade in the ticker symbols mentioned, both long or short. My articles represent my personal opinion and analysis and should not be taken as investment advice. Readers should do their own research before making decisions to buy or sell securities. Trading and investing include risks, including loss of principal.

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