Investors Turn Cautious After Weak Retail Sales Despite Strong Results from Leading Banks

Barry Adams
14 Apr, 2023
New York City

Stocks trended lower after investors digested latest earnings from large banks and weak retail sales reports. 

JPMorgan Chase, Wells Fargo, Citigroup, PNC Financial reported quarterly earnings reports that matched or exceeded investor expectations. 

Earnings reports provided fresh insights in the health of the financial system after the collapse of Silicon Valley Bank. 

Megabanks in many ways are beneficiaries of the developing stress in the regional banks as rapid rise in interest rates impact treasury securities held-to-maturity accounts. 

Investors turned cautious after retail sales unexpectedly fell in March, reflecting wild swings in gasoline prices at pump stations and higher base effect. 

 

Unadjusted Retail Sales Declined In March 

Retail sales in March declined 1% from the month, following a downwardly revised 0.2% decline in February, the U.S. Census Bureau reported Friday. 

Retail sales from a year ago increased 2.9% and in the first quarter to March rose 5.4% from the previous year. 

The retail sales data are not adjusted for inflation, meaning real sales probably declined more as consumers battle high inflation and rising interest rates weigh on consumer behavior.  

Lower gasoline prices drove sales at pump stations by 5.5% from the previous month, general merchandise stores sales fell 3%, building materials and garden equipment sales decreased 2.1%, electronics and appliances sales fell 2.1% and motor vehicle sales at dealers eased 1.6%. 

Retail sales at food and beverage stores eased 0.1% from the previous month but rose 5.0% from a year ago. 

Sales at nonstore retailers increased 1.9% from the previous month but rose 12.3% from a year ago and inched up 0.1% from the previous month but rose 13.0% from a year ago at food services and drinking places. 

 

Industrial Production Advanced In March   

Industrial production increased 0.4% from the previous month in March and rose 0.2% from a year ago, the Federal Reserve reported Friday. 

The industrial production index increased 0.5% from a year ago. 

The index for utilities increased 8.4% in March boosted by heating demand after the return to a more seasonal weather following a mild February. 

Manufacturing and mining output fell 0.5% and capacity utilization increased to 79.8%, a rate 0.1 percentage point above the long run fifty year average.   

 

Indexes & Yields 

The S&P 500 index fell 0.2% to 4,139.33 and the Nasdaq Composite index dropped 0.4% to 12,117.48. 

The yield on 2-year Treasury notes increased to 4.09%, 10-year Treasury notes rose to 3.50% and 30-year Treasury bonds increased to 3.72%. 

Crude oil price increased 42 cents to $82.56 a barrel and natural gas price was unchanged at $2.01 a thermal unit. 

 

U.S. Stock Movers 

BlackRock Inc traded nearly unchanged at $670.21 after the financial services company reported first quarter results.  

Boeing Co declined 6.1% to $220.55 after the aerospace company said it may have to lower delivery of its 737  Max planes because of fittings used in aft fuselage made by Spirit AeroSystems. 

Boeing clarified that the "non-safety issue"  is not expected to affect the panes in service but will impact a number of undelivered planes. 

Spirit AeroSystems Holdings Inc plunged 14.4% to $30.45 and the company said it will work with Boeing and "continue to coordinate closely with our customer to resolve this matter and minimize impacts while maintaining our focus on safety."

Earlier in the week, Boeing said it delivered 113 737 planes in the first quarter and delivered 130 commercial airplanes, including 11 787 airplanes,  in the period.  

Citigroup Inc increased 2% to $48.25 after the global bank reported first quarter revenues ahead of expectations. 

Express Inc increased 18% to 67 cents after the company and WHP Global agreed to acquire e-commerce brand Bonbons from Walmart. 

JPMorgan Chase & Co increased 5.7% to $136.32 after the New York based bank reported record revenue in its latest quarter. 

Lucid Group Inc declined 9% to $7.51 after the luxury electric vehicle maker said it delivered fewer of its sedans than it produced in the first quarter, indicating weak customer demand. 

PNC Financial Services Group increased 1.3% to $123.05 after the company reported quarterly results and recorded provision for credit losses lower than in the previous quarter. 

Wells Fargo & Co increased 4.2% to $41.30 after the California based bank reported higher-than-expected revenue and earnings in the first quarter.