After three up days, the Dow lost a little ground today when December retail sales were reported to have suffered their biggest drop in  nine years, dragging the index down 103 points.  This would make sense in view of yesterday’s report that consumer prices had not risen.  So the flip side about good news on inflation is that prices did not go up because of weakened demand.  Today’s weaker economic data has now lowered Q4 earnings growth to 16.2 percent from 16.6 just yesterday.  Q1 outlook remains unchanged at 0.3 percent year-on-year decline.  Volume was again below recent averages at just under 6.2 billion. 

Thu  FEBRUARY 14, 2019 /5:00 pm 

S&P 500 slips as grim retail sales data overshadows trade hopes

Stephen Culp

DJ:  25,439.39  -103.88       NAS:  7,426.96  +6.58        S&P:  2,745.73  -7.30        2/14

NEW YORK (Reuters) - The S&P 500 and the Dow slipped while the Nasdaq posted a slim gain on Thursday as investors struggled to square grim retail sales data with hopes that high-level talks in Beijing could resolve the ongoing U.S.-China trade dispute.  Paring earlier losses, the S&P 500 held above its 200-day moving average, a key technical level, for the third straight session.  All three major U.S. stock indexes were held back by rate-sensitive financial stocks as U.S. Treasury yields fell on the weaker-than-expected economic data.

Talks to defuse the ongoing tariff dispute between the world’s two largest economies moved to a higher level as U.S.-China negotiations progressed in Beijing ahead of the March 1 deadline.  But trade optimism was undercut by a report from the U.S. Commerce Department showing retail sales in December suffered their biggest drop in more than nine years, stoking fears of an economic slowdown.  “The market has been climbing this wall of worry since Christmas,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “Some of that worry might turn into reality, and that’s what’s holding investors back.”   “I wouldn’t say there’s a lot of conviction out there,” Ghriskey added.

With the fourth-quarter reporting season now more than three-fourths complete, analysts now see earnings growth of 16.2 percent for the quarter, according to Refinitiv data.  But first-quarter estimates are less favorable. They show a 0.3 percent year-on-year decline, which would mark the first quarter of negative growth since the earnings recession that ended in 2016.

The Dow Jones Industrial Average fell 103.88 points, or 0.41 percent, to 25,439.39, the S&P 500 lost 7.30 points, or 0.27 percent, to 2,745.73 and the Nasdaq Composite added 6.58 points, or 0.09 percent, to 7,426.96.  Of the 11 major sectors in the S&P 500, 6 closed in negative territory, with consumer staples and financials showing the biggest percentage declines.

Cisco Systems Inc rose 1.9 percent on the heels of a better-than-expected earnings report as the network gear maker benefited from strength in newer businesses and shrugged off the impact of the U.S.-China trade war.  Shares of American International Group Inc slid 9.0 percent, marking its worst day in four years after the global insurer posted a quarterly loss.  Coca-Cola Co shares fizzled, dropping 8.4 percent and providing the biggest drag on the Dow after its full-year profit forecast fell well below Wall Street expectations.  Amazon.com dipped 1.1 percent after pulling the plug on its planned headquarters in New York due to local opposition.  Canada Goose’s quarterly results and profit forecasts beat analyst expectations, but said higher labor costs and expansion investments hit profit margins. The luxury coat maker’s U.S.-listed shares sank 12.9 percent.  Avon Products Inc plunged 11.0 percent after the multi-level marketing cosmetics brand missed quarterly revenue estimates.

Advancing issues outnumbered declining ones on the NYSE by a 1.21-to-1 ratio; on Nasdaq, a 1.02-to-1 ratio favored advancers.  The S&P 500 posted 19 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 67 new highs and 26 new lows.

Volume on U.S. exchanges was 7.18 billion shares, compared to the 7.43 billion average over the last 20 trading days.