Stocks slip in cautious trading after weak US retail sales data

NEW YORK: Stock markets retreated in sparse summer trading Friday (Aug 14), with the uncertain outlook for the Middle East war and the US economy prompting investor caution ahead of the weekend.

Oil prices turned higher and investors braced for further volatility as US and Iranian officials insisted on control of the Strait of Hormuz, which has been largely shut to tanker traffic by Iran since the US and Israeli launched strikes nearly six months ago.

On Wall Street, where the S&P 500 hit a new record high on Thursday, stocks slipped into negative territory, and most European indexes ended lower after a mixed showing in Asia.

Weaker than expected US retail sales raised new questions about the prospects for the world’s biggest economy.

Total US retail sales were down 0.6 per cent in July from the previous month, at US$763.6 billion, while a new US consumer sentiment survey by the University of Michigan showed confidence dropped by around eight percent in August, ending two months of gains.

“Although the early-month weakening in sentiment was pervasive across various demographic groups, notably large reductions were seen among older consumers, lower-income consumers, and those without a college degree,” said consumer survey director Joanne Hsu. “These groups are all particularly vulnerable to any erosion of purchasing power stemming from inflation.”

While the data fed into expectations that the Federal Reserve would not hike borrowing costs anytime soon, “investors should be careful what they wish for,” said Bret Kenwell, investment analyst at eToro.

“For the economy to stay resilient, consumers will need to do the same,” he said, noting that even though US petrol prices eased in July, “that relief did not translate into stronger spending elsewhere.”