Futures pare losses after surprise rise in monthly retail sales

September 16, 2021

By Ambar Warrick

(Reuters) -Wall Street indexes were set to open flat on Thursday, with economically sensitive sectors likely to gain as retail sales rose more than expected, indicating resilience in economic recovery.

S&P and Dow index futures pared losses after a report from the Commerce Department showed retail sales unexpectedly rose in August, heralding positive trends in consumer spending, which is a key factor in gauging economic strength.

Data on Wednesday had also shown a dip in import prices, which coupled with a recent reading that showed consumer prices were slowing, implied that inflation had likely peaked and would fall to more manageable levels eventually.

But stocks have struggled to hold on to record highs hit earlier this month due to seasonally weaker trends in September, as well as concerns that the economic recovery could lose steam towards the end of the year.

Meanwhile, the labor market remained under pressure, with data on Thursday showing initial jobless claims were slightly more than expected last week.

U.S. S&P 500 E-minis were down 4.5 points, or 0.1%, at 08:41 am ET. Dow E-minis were up 16 points, or 0.05%, with 4,334 contracts changing hands. Nasdaq 100 E-minis were down 45 points, or 0.29%

All three indexes had marked strong gains on Wednesday, with economically sensitive cyclical stocks benefiting the most from a rally in oil prices and data suggesting that factory activity growth remained steady in the country.

“Around the mid to end of August, we started to see a market that started to pull back. Concerns about tapering, inflation, concerns about China were all coming together… Yesterday’s bounce with the big run up in oil prices led people to sort of step in and buy the dip,” said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York.

U.S.-listed Chinese stocks extended losses in premarket trading, with Beijing’s regulatory overhaul of gambling in Macau coming as the latest source of consternation for a sector already hurt by crackdowns on technology and education services.

U.S.-based casino operators Las Vegas Sands Corp, Wynn Resorts Ltd and MGM Resorts International also fell before the opening bell.

A batch of weak Chinese economic data, coupled with concerns over a debt crisis in the country’s no.2 property developer have dented appetite for Chinese assets in recent sessions.

Among other movers, videogame publisher EA rose 2.2%, as it maintained its guidance despite delaying the launch of its widely anticipated “Battlefield 2042” title by a month.

(Reporting by Ambar Warrick in Bengaluru; Editing by Arun Koyyur)

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