Global Economic Worries Keep Popular Averages In Check On Wall Street

Barry Adams
15 Aug, 2023
New York City

Market averages in New York tracked lower world markets after the latest indicators from China showed weaker-than-expected economic conditions. 

The S&P 500 and the Nasdaq Composite indexes declined as much as 0.7% after China's retail sales and industrial output rose less-than-expected and jobless rate rose in July. 

The weakness in the property market is at the heart of China's economic weakness after years of building. 

Buyers are increasingly staying on the sidelines on the expectation of more price weakness, further denting the market liquidity and exacerbating property developer's debt-heavy balance sheets. 

In other news in Asia, Japan's second quarter GDP soared at an annual pace of 6% largely because of  a jump in net exports and sharp rebound in international tourist arrivals. 

Business investment was flat and private consumption unexpectedly declined 0.5% in the second quarter. 

Private consumption accounts for about 50% of Japan's economy and domestic demand is negatively impacted by the weakening of yen which is lifting the cost of imports. 

Closer to home, preliminary U.S. retail and food services sales rose 0.7% in July, and sales rose for the fourth month in a row. 

Seasonally adjusted but not adjusted for price inflation, retail sales rose 3.2% from a year earlier, the U.S. Census Bureau reported Tuesday.  

The rise in sales showed resilient consumer spending despite rate hikes and price increases. 

Online retail sales increased 1.9%, sporting goods and related stores jumped 1.5% and food services and beverages stores advanced 1.4%. 

On the downside, furniture sales decreased 1.8% from the previous month and appliances and electronics stores sales fell 1.3% but sales at gas stations rose only 0.4% from the previous month but plunged 20.8% from a year ago, despite a jump in gasoline prices. 

 

U.S. Indexes & Yields 

The S&P 500 index traded down 0.4% to 4,477.17 and the Nasdaq Composite fell 0.5% to 13,426.12. 

The yield on 2-year Treasury notes increased to 4.98%, 10-year Treasury notes inched higher to 4.23% and 30-year Treasury bonds edged down to 4.33%. 

Crude oil increased $1.25 to $81.28 a barrel and natural gas prices decreased 6 cents to $2.73 a thermal unit. 

 

U.S. Stock Movers 

Home builders were in focus after Berkshire Hathaway acquired positions in NVR, Lennar and DR Horton, according to a regulatory filing.

DR Horton gained 2.2% to $125.97, Lennar jumped 0.6% to $124.61 and NVR gained 1.7% to $6,262.79 after the diversified conglomerate Berkshire Hathaway took stakes in home builders. 

According to a regulatory filing with the SEC, Berkshire acquired a $726 million stake in DR Horton, $70 million in NVR and $17.2 million in Lennar.  

Discover Financial Services dropped 7.7% to $94.66 after the company announced the resignation of chief executive Roger Hochschild.   

The company's board appointed John Owen as interim president and chief executive and Hochschild will remain as an advisor through the end of the year. 

Home Depot Inc jumped 2.2% to $126.0 after the do-it-yourself retailer reported sales declined 2% to $42.9 billion and comparable sales in the period across the company and in the U.S. declined 2%. 

Sales were under pressure after customers delayed bid-ticket purchases. 

Net income in the quarter declined 9.9% to $4.6 billion from $5.2 billion and diluted earnings per share fell to $4.65 from $5.05 a year ago. 

The retailer reaffirmed its 2023 sales and comparable sales to decline between 2% and 5% and diluted earnings per share to fall between 7% and 13% from a year earlier.