Friday’s Stock Market Open: US Equities Drop As Retail Sales Plunged 16.4% In April, China Tensions Renewed

Update: 12:05 p.m. EDT:

U.S. stocks remained in the red as of Friday noon, but above intraday lows.

The Dow Jones Industrial Average dropped 144.99 points to 23,480.35, while the S&P 500 fell 17.31 points to 2,835.19 and the Nasdaq Composite Index tumbled 54.68 points to 8,889.04.

In Europe markets closed higher, as Britain’s FTSE-100 gained 1.01%, while France’s CAC-40 edged up 0.11% and Germany’s DAX rose 1.24%.

The Federal Reserve said Friday that its industrial production index plunged by a record 11.2% in April. Manufacturing output dropped by 13.7% -- as production of cars, trucks and auto parts cratered by more than 70%.

Industry capacity came in at 64.9%, another record low. Factory capacity utilization fell to an all-time low of 61.1%.

But the University of Michigan’s consumer sentiment index unexpectedly rose to 73.7 in May, up from 71.8 in April.

“The [Coronavirus Aid, Relief, and Economic Security Act] relief checks improved consumers’ finances and widespread price discounting boosted their buying attitudes,” said Richard Curtin, chief economist for the Surveys of Consumers.

Original story:

U.S. stocks opened lower on Friday as retail sales plunged in April and the U.S. renewed tensions with China over tech giant Huawei.

The Dow Jones Industrial Average dropped 215.03 points to 23,410.31, while the S&P 500 fell 26.73 points to 2,825.77 and the Nasdaq Composite Index tumbled 104.05 points to 8,839.67.

Retail sales plunged by a record 16.4% in April.

Sales at clothing and accessories stores plunged by 78.8%; restaurants and bars saw a 29.5% drop; and grocery stores lost 13.2% in sales. But online retailers witnessed an 8.4% gain in sales. Also, sales at department stores tumbled 28.9%, while furniture stores suffered a 58.7% drop. Auto and auto parts sales sank 12.4% and gas sales declined 28.8%.

"Anxiety and fear are very strong emotions and consumer behavior may take time to adjust," wrote Jack Kleinhenz, chief economist at the National Retail Federation. "But in the end, shopping is more than a transaction. It is a social activity that is part of the fabric of American life."

“Retail sales already saw their sharpest monthly fall on record in March but, with lockdown measures only coming in during the second half of the month, sales are set to fall even further in April,” Michael Pearce, senior U.S. economist at Capital Economics wrote on May 8.

The New York Fed’s Empire State business conditions index rose by 29.7 points to minus-48.5 in May -- the second lowest reading on record.

The Trump administration has moved to block semiconductor shipments by global chipmakers to Huawei Technologies of China. The Commerce Department also said it will “strategically target Huawei’s acquisition of semiconductors that are the direct product of certain U.S. software and technology.” In turn, China warned it would retaliate against U.S. tech firms.

On Thursday evening, President Donald Trump said he didn’t wish to talk to China’s President Xi Jinping now, although he added the two men have a very good relationship. Trump, who has blamed China for the coronavirus outbreak, even contemplated cutting off trade ties with Beijing.

More than 4.4 million coronavirus cases have been confirmed around the world, with more than 1.4 million in the U.S.

“Given the amount of uncertainty about this crisis that still looms, we should not be surprised by the setbacks we’ve seen in markets this week,” said Scott Knapp, chief market strategist at CUNA Mutual Group.

Overnight in Asia, markets were mixed. The Shanghai Composite edged down 0.07%; Hong Kong’s Hang Seng slipped 0.14%; while Japan’s Nikkei-225 rose 0.62%.

In Europe markets traded higher, as Britain’s FTSE-100 gained 0.78%, while France’s CAC-40 edged up 0.07% and Germany’s DAX rose 0.82%.

Crude oil futures jumped 4.17% at $28.71 per barrel, Brent crude rose 2.18% at $31.81. Gold futures climbed 0.73%.

The euro edged up 0.31% at $1.0839 while the pound sterling slipped 0.58% at $1.216.