U.S. stocks fall after weak inflation, retail sales data

Investing.com-- U.S. stocks fell Thursday, handing back some of the week’s hefty gains, as investors digest corporate earnings as well as weak economic data, raising slowdown fears.

At 10:44 AM ET (14:44 GMT), the Dow Jones Industrial Average fell 131 points, or 0.3%, the S&P 500 index dropped 18 points, or 0.3% and the NASDAQ Composite slipped 145 points, or 0.75%. 

Despite today’s losses, the main averages are still on course for healthy gains this week as the trade deal between China and the U.S. eased fears of a prolonged tariffs war, potentially hitting economic growth. 

PPI inflation, retail sales slump 

With the trade turmoil seemingly settling down, investors are turning their attention to the economic data slate, looking for signs of damage being done to the world’s largest economy. 

The latest producer price index showed that factory gate prices slumped on a monthly basis in April, in the latest sign of cooling inflationary pressures.

The producer price index for final demand fell 0.5% in April, the first monthly fall since 2023, after the previous month’s figure was revised to flat from a fall of 0.4%.

Taking out more volatile items like fuel and food, so-called “core” PPI also fell on a monthly basis, down 0.4%. 

Data released earlier this week showed that the more widely-watched consumer price index grew by 2.3% in the 12 months to April, compared with expectations that it would match March’s pace of 2.4%.  

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It was the lowest annual rate of inflation since February 2021, shortly before pent-up pandemic-fueled demand and supply constraints led to soaring prices.

Additionally, retail sales fell 1.0% on the month in March, a more substantial loss than the 0.5% expected. 

A surge of buying before the implementation of Trump’s punishing tariffs led to the largest increase in the metric in more than two years in March. Separate surveys have indicated that households have widely been anticipating that the levies will push up prices.

Walmart impresses in Q1

The main corporate release Thursday comes from retail giant Walmart (NYSE:WMT), with the retail giant posting better-than-anticipated first-quarter earnings, although its finance chief warned that tariff tensions could soon drive prices higher..

Known for its low prices and massive selections, Walmart has become something of a bellwether for shopper sentiment. In February, the company issued downbeat guidance for the year, although CFO John David Rainey said American consumers remain "resilient" and focused on value.

Elsewhere, Chinese e-commerce titan Alibaba (NYSE:BABA) missed earnings expectations for its fiscal fourth quarter on both the top and bottom line, while agricultural equipment manufacturer Deere & Company (NYSE:DE) reported better-than-expected second quarter results, but lowered the bottom end of its full-year net income forecast range amid challenging market conditions.

Cisco Systems (NASDAQ:CSCO) raised its annual results forecast, betting on steady demand from cloud customers for its networking equipment, driven by the artificial intelligence boom.

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UnitedHealth (NYSE:UNH) stock slumped after the Wall Street Journal reported the company was being investigated by the Department of Justice over alleged criminal fraud involving Medicare. 

The investigation marks a new headwind for UnitedHealth, which is already nursing a sharp selldown in its shares this year on concerns over government scrutiny, weakening financials, and signs of internal strife. The company abruptly replaced its CEO this week. 

Foot Locker (NYSE:FL) stock soared after Dick’s Sporting Goods (F:DKS) confirmed it is exploring a deal to buy the company for roughly $2.3 billion.

Crude slumped on Iran nuclear deal talk

Oil prices fell sharply Thursday, extending recent losses, as the growing expectations for a potential U.S.-Iran nuclear deal added to demand concerns following a surprise build in U.S. inventories.

At 09:45 AM ET, Brent futures dropped 2.56% to $64.32 a barrel, and U.S. West Texas Intermediate crude futures fell 2.7% to $61.43 a barrel.

Both benchmarks lost just under 1% on Wednesday, ending a four-day rally and slipping from the two-week high reached earlier this week.

A U.S.-Iran nuclear deal could potentially allow Tehran to export more of its crude into the world market, loosening the global crude supply-demand balance.

Additionally, data from the Energy Information Administration showed crude stockpiles rose by 3.5 million barrels in the week ended May 9, suggesting that demand may be cooling in the world’s largest energy consumer.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads. (Ambar Warrick and Peter Nurse contributed to this article)

 

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