Stock futures cut some losses Thursday morning after a stronger-than-expected report on retail sales, suggesting consumer spending held steady despite concerns over the Delta variant.
Contracts on the S&P 500 moved one notch below the flat line, and each of the Dow and Nasdaq indices also followed lower openings.
Traders considered a key set of economic data, which showed an unexpected increase in spending last month even as the latest wave of coronavirus spread across the United States. revised drop of 1.8% in July. Consensus economists were looking for a 0.7% drop, according to Bloomberg data.
The latest data served as another indicator of the relative strength of economic activity after a first wave of reopening in late spring and summer. While many economists have agreed that the general trend is for growth to decelerate, the true extent of the deceleration remains to be seen.
This uncertainty has also prompted equity investors to closely monitor incoming data for signals on how the economic environment could impact large company earnings. Amid concerns such as the Delta variant, lingering supply chain constraints, labor shortages and a possible Federal Reserve policy pivot, the S&P 500 has so far fallen by 0, 9% in September.
“The stock markets have been positive for seven consecutive months, which is quite rare… So yes, investors are rightly concerned,” Akshata Bailkeri, equity analyst at Bruderman Asset Management, told Yahoo Finance. “But the reason we’re seeing this is that those earnings behind a lot of these companies continue to grow, and that’s really what drives these index stocks up.”
As FactSet pointed out in its last weekly report, Consensus analysts are still looking for S&P 500 earnings growth of nearly 28% for the third quarter. While a deceleration from the growth rate of over 80% displayed in the second quarter of this year, that would still mark the third-highest year-over-year increase in earnings for the index since 2010. The third quarter earnings season is expected to resume next month.
“I don’t think statistics or just how long it’s been a good reason [for a market correction]. Usually you need some kind of negative catalyst, ”Randy Frederick, Chief Derivatives Trading Charles Schwab told Yahoo Finance. “What we have right now is not so much negative catalysts as a lack of positive catalysts.”
“I think what has caused some of this more recent volatility is that we’ve had a number of Wall Street companies lowering both the GDP estimates and the corporate earnings estimates.” , he added. “These are just predictions; they may turn out to be wrong. Certainly the past two quarters earnings results have far exceeded expectations.”
8:35 a.m. ET: Retail sales unexpectedly surged in August, jobless claims hold near March 2020 low
Retail sales rose unexpectedly in August after dropping in July, suggesting consumers held up more strongly than expected despite the latest wave of the Delta variant.
Sales rose 0.7% on the month, against a drop by the same expected margin, according to Bloomberg consensus data.
The increase came as categories, including non-store retailers or online outlets, posted notable monthly increases. Sales at non-store retailers rose 5.3% in August. At the same time, sales at furniture and home furnishings stores increased 3.7%, and general merchandise stores increased 3.5%.
Food services and drinking places sales were flat during the month, but were still up 32% from a year ago. Sales at clothing and accessories stores – another indicator of the reopening – rose only 0.1%.
Meanwhile, a separate Labor Department report on Thursday showed new weekly jobless claims rose 332,000 last week, 10,000 more than expected. Still, this was only a slight jump from the pandemic-era low of 312,000 the week before.
“At first glance, it is disappointing but not entirely surprising to see a slight increase in new jobless claims given the Delta variant’s track record. This somewhat counteracts the decline in continued claims of a new era of pandemic.” , said Mark Hamrick, senior economic analyst at Bankrate, in a statement.
7:34 a.m. ET: Thursday: Stock futures plunge ahead of retail sales and jobless claims
Here’s where the markets were trading on Thursday morning:
S&P 500 Futures Contracts (ES = F): -4.75 points (-0.11%) to 4,477.00
Dow Futures (YM = F): -9 points (-0.03%) to 34,810.00
Nasdaq Futures (NQ = F): -29.00 points (-0.19%) to 15,475.00
Raw (CL = F): $ -0.14 (-0.19%) to $ 72.47 per barrel
Gold (CG = F):-$ 17.00 (-0.95%) to $ 1,777.80 per ounce
10-year cash flow (^ TNX): +1.2 bps for a yield of 1.136%
6:10 p.m. ET Wednesday: Stock futures open higher
Here are the main movements on the markets on Wednesday evening:
S&P 500 Futures Contracts (ES = F): +4 points (+ 0.09%) at 4,485.75
Dow Futures (YM = F): +23 points (+ 0.07%) at 34,842.00
Nasdaq Futures (NQ = F): +9.25 points (+ 0.06%) at 15,413.25
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck