S&P 500 Closes Down, but Above Lows Despite Fresh Worries of Fed Tightening

By Yasin Ebrahim

Investing.com – The S&P 500 trimmed some losses Thursday, even as an unexpected rise in monthly retail sales renewed expectations for the Federal Reserve to tighten monetary policy with just days to go until the U.S. central bank's meeting next week.

The S&P 500 fell 0.16%, the Dow Jones Industrial Average slipped 0.18%, or 63 points, the Nasdaq gained 0.13%.

“[T]he Treasury curve bear steepened and the S&P500 fell presumably on the good news is bad for Fed expectations logic,” Scotiabank said in a note.

The Commerce Department said Thursday that retail sales rose 0.7% last month. That confounded economists’ forecast for a 0.8% decline. The retail sales control group – which has a larger impact on U.S. GDP – climbed 2.5% topping expectations for a 0.1% decrease.

The upside surprise in retail sales suggests "suggests the new wave of the pandemic is not having a major impact on the economy." Desjardins said in a note. "This could further reassure Federal Reserve officials," it added.

The Fed gets its two-day meeting underway next week, with many on Wall Street expecting the central bank to further lay out path toward monetary policy tightening.

“Retail sales rebounded in August, despite sizable drag from auto sales. Outside of autos, sales posted broad-based increases, with particular strength in online sales, general merchandise and furniture sales,” Jefferies (NYSE:JEF) said in a note.

The U.S. Department of Labor reported initial jobless claims increased by 20,000 to 332,000 in the week ended Sept. 11, missing forecasts for a 18,000 decline.

On the manufacturing front, The Philadelphia Fed reported that its manufacturing index rose to a reading of 30.7 from 19.4 in August.

The positive economic data failed to spur cyclical corners of the market as energy and materials were the worst performing sectors on the day.

Newmont Goldcorp Corp (NYSE:NEM), Martin Marietta Materials (NYSE:MLM), and Freeport-McMoran Copper&Gold (NYSE:FCX), were the worst performers in materials, with the latter down 6%.

Freeport-McMoran Copper&Gold Inc (NYSE:FCX) deepens its losses amid an ongoing decline in copper prices as tailwinds including stimulus and inflation concerns are expected to fade.

Energy, meanwhile, gave back some its recent gains even as oil prices cut its losses.

Tech stocks found their footing late in session to move off session lows, shrugging off a rise in Treasury yields, which tend to hurt growth stocks.

Google-parent Alphabet (NASDAQ:GOOGL), Apple (NASDAQ:AAPL), and Facebook (NASDAQ:FB), were in the red, while Microsoft (NASDAQ:MSFT) cut losses to end the day above the flatline.

In other news, Beyond Meat (NASDAQ:BYND) fell 2% after Piper Sandler downgraded the stock to underweight from neutral, and cut its price target on the stock to $95 from $120, citing expectations for slowing sales ahead.

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By Matt Earle

Matthew Earle is the Founder of MiningFeeds. In 2005, Matt founded MiningNerds.com to provide data and information to the mining investment community. This site was merged with Highgrade Review to form MiningFeeds. Matt has a B.Sc. degree with a minor in geology from the University of Toronto.

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