Stocks Slip From Records but Log a Third Straight Weekly Gain
Wall Street eased on Friday after a preliminary read on consumer sentiment came in near 51, though the major indexes still closed out their strongest three-week stretch since the spring.
NEW YORK — The major stock indexes finished slightly lower on Friday, pulling back from record territory after a survey showed American consumers turning gloomier about the economy, but all three still recorded a third consecutive weekly advance.
The S&P 500 and the Dow Jones Industrial Average each slipped about 0.2%, while the Nasdaq Composite fell roughly 0.3% and eked out a small weekly gain.
Sentiment interrupted the story
The catalyst was the University of Michigan's preliminary August reading on consumer sentiment, which came in near 51 — down about 8% from July and enough to end two months of improvement. Respondents again pointed to prices as their dominant concern.
The report followed government data showing retail sales fell 0.6% in July, the steepest monthly drop in more than a year. Together the two releases sketch a consumer who is tiring, which matters for an equity market whose earnings estimates assume steady household spending through the second half.
Rates and oil set the tone underneath
Two prices have mattered more than any headline this summer. Brent crude, which settled at $87.07 earlier in the week, is the transmission channel for the inflation that keeps the Federal Reserve frozen. And the 10-year Treasury yield, which has climbed toward its highest level in about 20 months, is the discount rate against which every equity valuation is measured.
Neither is behaving in a way that supports much more multiple expansion. The rally of the past three weeks has instead been an earnings story, powered by results from the largest technology companies at the start of the month.
What next week brings
Attention turns to the retail earnings calendar, which will test whether the July spending slowdown showed up in company results or was confined to the aggregate data, and to any signal from Fed officials about how seriously the September meeting is in play.
