U.S. equities and stock exchange traded funds slipped Friday after the latest round of worse-than-expected U.S. economic news kept market sentiment muted.
The S&P 500 Index, along with related funds including the SPDR S&P 500 ETF (NYSEArca: SPY), iShares Core S&P 500 ETF (NYSEArca: IVV) and Vanguard 500 Index (NYSEArca: VOO), were 0.2% lower Friday.
U.S. stocks were mostly lower on mixed sector trading, with industrials and consumer goods dragging on the markets, following a number of soft first-quarter economic numbers. Nevertheless, U.S. markets remain near record levels as participants argue that the start of the year tends to exhibit weak economic growth and better-than-expected first quarter earnings also helped support the weakness while volatility fell below historical lows, the Wall Street Journal reports.
“It is notable that no matter what happens on the news, that might have otherwise resulted in some fear factor, has not really affected the market,” Thomas Martin, senior portfolio manager at Globalt Investments, told Reuters. “I think complacency is a big part of that.”
Weighing on market sentiment Friday, retail sales fell short of expectations in April while a closely watched measure of underlying U.S. inflation also showed weakness. When excluding food and energy prices, the consumer-price index rose 1.9% in April year-over-year, the first time it’s been below 2% since October 2015.
Retail earnings also pressured the consumer discretionary sector, notably Nordstrom, which reported an unexpected fall in same-store sales, and J.C. Penney, which also revealed a first-quarter loss.
”Looking at traditional brick and mortar sales, it’s pretty clear [retailers]are losing to online juggernauts,” Jimmy Chang, chief investment strategist at Rockefeller & Co, told the WSJ.
Despite the stumble with the recent retailer results, first quarter corporate earnings have been overall supportive of the higher valuations in U.S. markets as companies are on track for the fastest growth in earnings per share since 2011.
“The first-quarter earnings seasons is one of the best overall we’ve seen in the past decade,” Olivier Marciot, investment manager at Unigestion, told the WSJ. “Consumption has been kind of weak in the last couple of months…but we are not worried at all for the moment about the U.S. consumer.”
For more information on the markets and U.S. Stock ETFs, visit our S&P 500 category.