US close: S&P 500 down for third week amid investor pessimism and hawkish Fedspeak

Wall Street dropped at the end of the week despite the release of significantly better-than expected readings on retail sales and consumer confidence referencing the month of April.

The S&P 500 closed down by 0.5% for the week - for a third consecutive five-day stretch - at 2,046.61, leaving the benchmark gauge roughly at its 50-day moving average, an important level of so-called technical support, an important near-term reference for momentum traders.

In parallel, the Dow Jones Industrials Average slipping by 155.18 points of 1.05% to 17,535.32 while the Nasdaq Composite gave back another 19.66 points or 0.42% to 4,717.68.

To take note of, on the previous evening Boston Fed president Eric Rosengren, usually of a more dovish bent, surprised some market watchers by suggesting he might support a June Fed rate hike.

Friday's losses came about against a backdrop of weakness in shares of retailers, continuing large outflows from equity funds and 'market chatter' regarding the potential implications of the result of November's presidential elections for the economy and US/global financial markets.

According to Bank of America-Merrill Lynch, who cited EPFR data, global equity funds had seen $44bn in outflows over the previous five weeks, the largest exodus since August 2011.

"We stay cautious: Positioning = "grind higher"; Policy & Profits = "summer of shocks"," BofA's Michael Hartnett and Brian Leung said in a research report sent to clients.

Also worth noting perhaps, options pricing were possibly suggesting a move higher for stocks, in so far as they pointed to excess pessimism, according to work by oft-quoted options-writers Myron Scholes and Ashwin Alankar at Janus Capital, the Financial Times's Stephen Foley wrote on Friday.

For his part, well-regarded ex-Secretary State James Baker III poured cold water on suggestions on suggestions from some presidential candidates favouring a weaker NATO or that more countries be allowed to hold nuclear weapons.

"We've a got a lot of problems today, but we'd have a hell of a lot more if that were the case," Baker said.

Strong retail sales and consumer confidence

US retail sales jumped by 1.3% month-on-month in April, surpassing forecasts for a 0.8% gain by a wide margin. Excluding automobiles they also came in ahead of forecasts, rising by 0.8% (consensus: 0.6%).

A closely-tracked 'control group' of retail sales rose by 0.9%, more than doubling economists forecasts for a rise of 0.3%.

That suggested the rate of growth in real consumption Stateside would see again of about 2.9% over the second quarter of 2016, according to Michael Moran, at Daiwa Capital.

His opposite number at Barclays, Jesse Hurwitz, was in a similar frame of mind. "We remain optimistic on the US consumer and continue to expect that a rebound in consumption growth will boost overall activity in the second quarter," Hurwitz said in a research report sent to clients.

The University of Michigan’s consumer confidence index improved from a reading of 89.0 in the month before to 95.8, according to the preliminary results of the survey which are released nearer to the beginning of each month. Nonetheless, Hurwitz was a tad suspicious about the magnitude of the gains.

Analysts had forecast a smaller improvement to 89.5.

Friday’s better than expected economic data initially sent the yield on the policy sensitive two-year US Treasury note up by two basis points to 0.78%, but by the closing bell it was down by one basis point at 0.75%. The yield on the benchmark 10-year Treasury yield was retreating two basis points to 1.73% two hours after the retail sales numbers flashed across trader's screens but ended down by five basis points at 1.70%.

Oil prices dropped after Russian Energy Minister Alexander Novak said on Thursday that he didn’t see the oil market balancing out until the first half of 2017.

West Texas Intermediate crude oil futures fell by 20 cents to $46.21 per barrel in NYMEX trading.

European stocks were mostly higher even after the International Monetary Fund warned a vote by the UK to leave the European Union would have a detrimental impact on the economy, with weakness in euro/dollar and upbeat data out of Germany giving equities a boost.

Commodity, retail stocks lead drop

Meanwhile, among US corporate stocks, Apple edged higher; the company announced it would invest $1bn in Didi Chuxing Technology, China’s competitor to Uber Technologies.

J.C. Penney Co. Inc. retreated after the fashion retailer posted an unexpected 1.6% drop in first quarter sales to $2.81bn, versus the $2.92bn expected by markets.

By sectors, the largest losses were incurred by non-ferrous metals (-5.62%), aluminium (-2.54%), oil equipment&services (-2.32%), transport services (-2.28%) and retailers (-2.22%).

Bloomberg's spot US dollar index picked up 0.49% to trade at 94.61 by the close of trading in New York, weighing on the prices of most commodities.

S&P 500 - Risers
Nvidia Corp. (NVDA) $40.98 +15.21%
Endo International Plc (ENDP) $14.05 +4.46%
Allergan plc (AGN) $223.35 +3.39%
Newmont Mining Corp. (NEM) $34.07 +2.59%
Monsanto Co. (MON) $99.94 +2.06%
ONEOK Inc. (OKE) $41.04 +1.86%
Mallinckrodt Plc Ordinary Shares (MNK) $58.40 +1.71%
Kohls Corp. (KSS) $35.74 +1.68%
Seagate Technology Plc (STX) $19.09 +1.60%
Williams Companies Inc. (WMB) $19.35 +1.57%

S&P 500 - Fallers
Sandisk Corp. (SNDK) $0.00 -100.00%
Nordstrom Inc. (JWN) $39.16 -13.42%
Starwood Hotels & Resorts Worldwide Inc. (HOT) $74.12 -8.37%
Freeport-McMoRan Inc (FCX) $10.41 -5.62%
United States Steel Corp. (X) $13.98 -5.60%
Southwestern Energy Co. (SWN) $11.26 -5.06%
Transocean Ltd. (RIG) $9.25 -4.44%
Ryder System Inc. (R) $65.54 -4.24%
Murphy Oil Corp. (MUR) $29.14 -3.99%
Wynn Resorts Ltd. (WYNN) $89.95 -3.71%

Dow Jones I.A - Risers
Intel Corp. (INTC) $29.91 +0.50%
Apple Inc. (AAPL) $90.52 +0.20%
Travelers Company Inc. (TRV) $112.67 +0.03%
Pfizer Inc. (PFE) $33.19 +0.00%

Dow Jones I.A - Fallers
Wal-Mart Stores Inc. (WMT) $64.94 -2.86%
Caterpillar Inc. (CAT) $70.07 -2.27%
E.I. du Pont de Nemours and Co. (DD) $62.91 -2.13%
Goldman Sachs Group Inc. (GS) $155.34 -1.73%
Boeing Co. (BA) $132.12 -1.71%
General Electric Co. (GE) $29.64 -1.50%
Procter & Gamble Co. (PG) $81.23 -1.43%
Visa Inc. (V) $76.83 -1.36%
Chevron Corp. (CVX) $100.74 -1.35%
United Technologies Corp. (UTX) $100.27 -1.17%

Nasdaq 100 - Risers
Nvidia Corp. (NVDA) $40.98 +15.21%
Endo International Plc (ENDP) $14.05 +4.46%
Incyte Corp. (INCY) $73.21 +3.79%
Biomarin Pharmaceutical Inc. (BMRN) $82.71 +3.66%
JD.com, Inc. (JD) $22.64 +2.40%
Seagate Technology Plc (STX) $19.09 +1.60%
Mylan Inc. (MYL) $39.16 +1.40%
TripAdvisor Inc. (TRIP) $64.46 +1.07%
Regeneron Pharmaceuticals Inc. (REGN) $369.46 +1.04%
Activision Blizzard Inc. (ATVI) $38.29 +1.00%

Nasdaq 100 - Fallers
Dollar Tree Inc (DLTR) $77.63 -3.31%
O'Reilly Automotive Inc. (ORLY) $258.22 -2.61%
Western Digital Corp. (WDC) $35.44 -2.53%
Bed Bath & Beyond Inc. (BBBY) $42.29 -2.22%
Norwegian Cruise Line Holdings Ltd. - Ordinary Shares (NCLH) $46.38 -1.72%
Tractor Supply Company (TSCO) $92.00 -1.68%
Liberty Interactive Corporation QVC Group (QVCA) $25.75 -1.64%
PACCAR Inc. (PCAR) $56.02 -1.60%
Walgreens Boots Alliance, Inc. (WBA) $78.61 -1.58%
Costco Wholesale Corp. (COST) $144.50 -1.51%