US stocks held onto record highs on Friday as the latest retail sales data helped ease concerns over consumer spending.
The S&P 500 Index was up slightly at 9:35 am in New York, holding the advance that was fueled earlier in the week by benign consumer-price inflation data. The Nasdaq 100 Index was little changed, while the Dow Jones Industrial Average rose 0.3%.
US retail sales rose in July in a broad-based advance, boosted by car sales and major online promotions in a sign consumers stepped up their spending in recent months. The value of retail purchases, not adjusted for inflation, increased 0.5% after an upwardly revised 0.9% gain in June, Commerce Department data showed Friday. Excluding cars, sales climbed 0.3%.
“Prior month retail sales numbers were actually better than previously reported, which makes today’s headline numbers better than they appear,” said Chris Zaccarelli, chief investment officer for Northlight Asset Management. “As long as consumer spending holds up and companies are able to retain workers because of that robust spending, the flywheel can continue to spin, pushing corporate profits and stock prices higher.”
Meanwhile, LPL Financial’s Jeffrey Roach said investors should monitor auto sales and other discretionary categories like restaurant spending to gauge the health of the consumer.
“Recession risks remain low, but I think it’s wise for the Fed to shift to a more neutral stance and cut rates in coming meetings,” Roach said.
Next week, investor focus will shift from economic data to the central bank’s annual symposium in Jackson Hole, Wyoming, where Chair Jerome Powell is scheduled to speak.
Bank of America Corp. strategists led by Michael Hartnett expect US stocks to decline in the event of dovish signals from the Fed at Jackson Hole. Hartnett said investors had flocked into risky assets from equities to cryptocurrencies and corporate bonds on optimism the central bank will reduce interest rates to shore up a weakening labor market and ease the US debt burden.
A dovish tone from Powell at Jackson Hole could result in stocks sliding as investors “buy rumor, sell fact,” Hartnett said in a note.
Meanwhile, President Donald Trump is set to meet Russian President Vladimir Putin in Alaska for their first summit in seven years. Both leaders have very different measures of success for the talks: the US president wants a ceasefire in Ukraine, while getting face time without having to make any concessions on the war is already a win for the Russian leader.
Among single stocks, UnitedHealth Group Inc., Lennar Corp. and DR Horton Inc. all climbed after the latest 13F filing showed Warren Buffett’s Berkshire Hathaway Inc. bought shares in the companies during the second quarter.
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