Dow futures fall 200 points ahead of U.S. retail sales data – MarketWatch

Dow futures fall 200 points ahead of U.S. retail sales data – MarketWatch

U.S. stock-index futures weakened Tuesday, but trimmed losses even though data showed retail sales fell more than expected in July.

What’s happening
  • Futures on the Dow Jones Industrial Average
    YM00,
    -0.65%

    were down 168 points, or 0.5%, at 35,366, after falling more than 200 points in earlier action.

  • S&P 500 futures
    ES00,
    -0.59%

    fell 0.4% to 4,455.25.

  • Nasdaq-100 futures
    NQ00,
    -0.75%

    were down 0.5% at 15,051.25.

U.S. stocks recovered Monday from early losses, and the S&P 500
SPX,
-0.64%

notched its 49th record close of 2021. The S&P 500 and Dow Jones Industrial Average
DJIA,
-0.72%

each established a fifth straight record close, while the Nasdaq Composite
COMP,
-0.20%

weakened by 0.2%.

What’s driving markets

Retail sales fell 1.1% in July, and were down 0.4% after excluding autos. Economists polled by The Wall Street Journal had penciled in a 0.3% monthly drop in sales in July, or a 0.2% gain when autos are excluded.

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Despite recent economic reports coming in weaker than forecast in both the U.S. and China, equities have gathered strength, thanks to strong corporate earnings.

“Although it’s disquieting, strong corporate earnings, low U.S. yields and a relatively soft U.S. dollar are the major catalysts for the U.S. market rally,” said Ipek Ozkardeskaya, senior analyst at Swissquote. “But the cliff between the economic indicators and the equity prices is somewhat unreasonable, hinting that there is potential for a sizable downside correction.”

Analysts at DataTrek Research say Wall Street estimates on S&P 500 index earnings per share, of $201 per share, are actually lower than the annualized EPS produced by companies in the second quarter, which equates to $208. “Would you sell a stock if you had a strong belief that earnings estimates were too low? Probably not. The same point goes for entire markets as well,” they said in a note to clients.

Concern about ongoing spread of the delta variant of the coronavirus that causes COVID-19 were hanging over financial markets again Tuesday. New Zealand took drastic action Tuesday, with the government putting the entire nation into a strict lockdown for at least three days after finding a single case of coronavirus infection in the community.

The Biden administration is preparing to announce that most vaccinated Americans should get a COVID-19 booster shot eight months after being fully vaccinated, the New York Times reported Monday night.

The continued spread of the virus was blamed for renewed congestion at ports in China, while contributing to worries about further lockdowns and a slowdown in economic activity around the world.

Fund managers, meanwhile, are taking slightly more defensive positions as they grow more pessimistic on the economy and corporate profits, according to the latest monthly survey conducted by Bank of America, which was released Tuesday.

Global fund managers have increased their holdings in healthcare, insurance, utilities and cash, while trimming their exposure to materials, commodities, emerging markets and energy, the survey found.

Also of note, the Hang Seng
HSI,
-1.66%

slumped 1.7% in Hong Kong and the Shanghai Composite
SHCOMP,
-2.00%

dropped 2% Tuesday after China published draft rules on competition and data security in the technology sector.

Which companies are in focus?
What are other markets doing?
  • The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    1.259%

    fell to 1.247% compared with 1.255% late Monday. Yields and debt prices move in opposite directions.

  • The ICE U.S. Dollar Index
    DXY,
    +0.34%
    ,
    a measure of the currency against a basket of six major rivals, rose 0.2%.

  • Oil futures lost ground, with the U.S. benchmark
    CL.1,
    -0.65%

    down 0.5% at $66.94 a barrel. Gold futures
    GC00,
    -0.04%

    ticked higher, up 0.1%, at $1,791.80 an ounce.

  • In European equities, the Stoxx Europe 600
    SXXP,
    -0.04%

    fell less than 0.1%, while London’s FTSE 100
    UKX,
    +0.20%

    rose 0.2%.

  • Japan’s Nikkei 225
    NIK,
    -0.36%

    fell 0.4%.

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