The major US stock indices show a moderate decline as market participants try to overcome oppressive macroeconomic data and increasing tension between the US and China.
The US Department of Commerce report showed that retail sales fell 16.4% last month, the biggest decline since the government began monitoring the series in 1992. The March data was revised to show that retail revenue fell by 8.3% instead of 8.7% as reported earlier. Economists predicted that retail sales will fall by 12.0% in April.
In turn, the Fed reported that industrial production fell 11.2% in April, the largest fall in the 101-year history of the index. Economists predicted that the index will show an 11.5% decline after a 4.5% decline in March.
At the same time, a report from the University of Michigan pointed to an unexpected improvement in consumer sentiment in the U.S. in early May amid widespread payments to mitigate the effects of the pandemic and discounts on expensive goods, although pessimism increased with regard to long-term prospects for revenue and the economy. According to the report, the preliminary sentiment index from the University of Michigan rose by 1.9 points – from its eight-year low in April – to 73.7. Experts expected the index to decline to 68.0 points.
Reuters reported that the U.S. Presidential Administration Donald Trump plans to cut off Chinese telecommunications giant Huawei Technologies from global chip suppliers. According to the agency, the U.S. Department of Commerce said it is amending the export rule “strategically aiming to acquire Huawei semiconductors, which are a direct product of certain U.S. software and technology. The Department also added that it “suppresses Huawei’s efforts to undermine U.S. export controls.
Meanwhile, the editor-in-chief of the Chinese newspaper Global Times said that if the U.S. will block the supply of key Huawei technologies, China may restrict or launch an investigation against such U.S. companies as Qualcomm (QCOM; -6.0% in the moment), Cisco (CSCO; -0.2%), Apple (AAPL; -2.2%) and suspend the purchase of Boeing aircraft (BA; -3.0%).
Most DOW components are minus (23 out of 30). Outsider is Raytheon Technologies Corp. (RTX; -3.49%). The growth leader is UnitedHealth Group Inc. (UNH; +1.37%).
Most of the S&P sectors are in the negative. The utility sector shows the largest decline (-2.40%). The sector of raw materials grew most of all (+1.22%).