US stock futures are flat Friday despite an unexpected 0.6% drop in July retail sales, following record highs for the S&P 500.
Dow Jones, S&P 500 and Nasdaq index futures are currently pointing to a roughly flat open on Friday, with stocks likely to show a lack of direction in early trading following the upward move seen over the two previous sessions.
Traders may take a step back to assess the recent strength in the markets, which lifted the S&P 500 to a record intraday high above 7,800 during Thursday’s session.
The broad market index also ended yesterday’s trading at a record closing high, while the tech-heavy Nasdaq reached its highest closing level in over two months.
The futures remained little changed even after the Commerce Department released a report showing an unexpected decline in U.S. retail sales in the month of July.
The Commerce Department said retail sales fell by 0.6 percent in July after rising by 0.2 percent in June. Economists had expected retail sales to inch up by 0.1 percent.
The unexpected decrease in retail sales partly reflected a significant pullback in sales by motor vehicle and parts dealers, which tumbled by 1.8 percent in July after surging by 2.4 percent in June.
However, excluding the slump in auto sales, retail sales still dipped by 0.3 percent in July after slipping by 0.2 percent in June. Ex-auto sales were expected to increase by 0.2 percent.
Stocks moved mostly higher during trading on Thursday, adding to the moderate gains posted in Wednesday’s session. The major averages all moved to the upside on the day, with the S&P 500 reaching a new record closing high.
The Nasdaq led the way higher, advancing 214.54 points or 0.8 percent to a two-month closing high of 26,803.03. The S&P 500 also climbed 50.49 points or 0.7 percent to 7,798.99, while the narrower Dow posted a more modest gain, inching up 69.72 points or 0.1 percent to 53,839.99.
The strength on Wall Street came after the Labor Department released a report showing producer prices in the U.S. unexpectedly came in flat in the month of July.
The Labor Department said its producer price index for final demand was unchanged in July after edging down by a revised 0.1 percent in June.
Economists had expected producer prices to rise by 0.2 percent compared to the 0.3 percent dip originally reported for the previous month.
The report also said the annual rate of growth by producer prices slowed to 4.7 percent in July from 5.5 percent in June. The annual rate of growth was expected to slow to 4.9 percent.
Combined with yesterday’s report showing only a slight uptick in consumer prices and last Friday’s report showing an unexpected decrease in jobs, the data added to optimism about the outlook for interest rates.
According to CME Group’s FedWatch Tool, the chances the Federal Reserve raised rates by a quarter point at its next meeting in September have fallen to 34.6 percent from 55.0 percent a week ago.
Stocks also benefited from a steep drop by the price of crude oil, with U.S. crude oil futures plunging by 2.4 percent on the day.
Crude oil prices came under pressure as worries about the outlook for demand are overshadowing the supply concerns raised by the ongoing conflict in the Middle East.
Computer hardware stocks extended the rally seen over the past several sessions, with the NYSE Arca Computer Hardware Index spiking by 4.7 percent to a new record closing high.
Significant strength was also visible among software stocks, as reflected by the 2 percent jump by the Dow Jones U.S. Software Index.
Telecom, transportation and commercial real estate stocks also saw notable strength, while gold stocks came under pressure amid a pullback by the price of the precious metal.