Stocks drift, hold S&P 500 back from a new record; mixed outlook from July retail sales report

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US retail sales rise for 3rd month but slowdown expected
July retail sales grew at slower pace compared to May and June. File/AP

Stocks barely budge to close out week

NEW YORK — Stock indexes barely budged on Wall Street Friday, leaving the S&P 500 just shy of its record once again.

The S&P 500 edged down less than 0.1 percent after drifting between small gains and losses throughout the day. They’re the latest meandering moves for the market, which has taken a pause after erasing almost all of the steep losses caused by the coronavirus pandemic.

In each of the prior two days, the S&P 500 made a brief run above its record closing high, which was set in February, only to fade in the afternoon. It remains within 0.4 percent of its record.

Wall Street was nearly evenly split between stocks that rose and fell, and the moves were almost uniformly modest.

Consumer spending is the main locomotive for the U.S. economy, and a report on Friday showed some more improvements for U.S. retailers, though less than economists expected.

The day’s trading was notably quiet, with only a few stocks in the S&P 500 falling even 2 percent.

Retail sales rise but slowdown is likely

WASHINGTON — Americans increased their spending at retail stores and restaurants in July for a third straight month, but some evidence suggests that sales are weakening with the expiration of government rescue aid that had previously put more money in people’s pockets.

Friday’s report from the Commerce Department showed that retail purchases rose by a seasonally adjusted 1.2 percent last month. The gains of the past three months have now restored retail purchases to their levels before they plunged in March and April when the pandemic shuttered businesses and paralyzed the economy.

Yet with Americans’ overall income now likely shrinking, economists expect spending to slow further. July’s sales increase was much smaller than May’s 18.3 percent gain and June’s 8.4 percent increase, when shoppers flocked to newly reopened businesses. In July, the viral outbreak re-surged in much of the nation, forcing some businesses to shut down again.

Industrial production up but lagging

WASHINGTON — American industry continued to regain ground lost in the coronavirus recession last month, but production remains well below where it was before the pandemic struck.

The Federal Reserve reported Friday that industrial production — including output at factories, mines and utilities — climbed 3 percent in July after surging 5.7 percent in June. Still, production remains 8.4 percent below its level in February before the outbreak began to spread rapidly in the U.S.

Factory output rose 3.4 percent last month, pulled higher by a 28.3 percent gain in production of cars, trucks and auto parts.

Ala. car plant getting a $830M boost

HUNTSVILLE, Ala. — Mazda Toyota Manufacturing, a new joint-venture between the two auto companies, on Thursday announced an additional $830 million investment in its new Alabama plant.

Gov. Kay Ivey said the investment in the facility is now $2.3 billion, up from the $1.6 billion originally announced in 2018. The additional money will be used to incorporate new manufacturing technologies into production lines and training for the 4,000 workers the plant is projected to eventually employ.

The plant, which is still under construction, has hired 600 employees so far and will resume accepting applications for production positions later this year. Production is expected to start sometime in 2021.

The Japanese automakers in 2018 picked Huntsville for the mammoth facility that will eventually have the capability to produce up to 300,000 vehicles per year: 150,000 each of a new Toyota SUV and a future Mazda crossover vehicle.

China factory output flat for July

BEIJING — China’s factory output rose just under 5 percent last month from a year earlier while retail sales fell slightly, suggesting the country’s recovery from the coronavirus pandemic remains muted.

The data reported on Friday show that despite a rebound in Chinese exports, domestic demand in the world’s second-largest economy is still lackluster.

Massive flooding across much of the south of the country also has hurt both production and consumer demand, though it pushed food prices sharply higher. Pork prices jumped nearly 86%, the report said.

Such “idiosyncrasies” don’t fully account for the prolonged weakness in consumer spending, said Stephen Innes of AxiCorp.

“Still, the glaring concerns around retail demand continue to speak volumes that it’s going to take more than stimulus and deep discounts on luxury products to get people shopping again,” he said in a report.

The increase in industrial output from a year earlier was on a par with the month before and slightly below forecasts of just over 5 percent.

China, where the pandemic began in December, was the first economy to start the struggle to revive normal business activity in March after declaring the virus under control. Manufacturing is recovering, but consumer spending is weak as many Chinese either lost their jobs or some income, or are are worried they might.

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