S&P 500 index slips, posts its first down week in a month

Friday, May 12, 2017, Vol. 41, No. 19
The Associated Press

NEW YORK (AP) — Shares of department stores sank again Friday, hurt by more evidence that shoppers are turning away from them. A drop in Treasury yields also put pressure on bank stocks, and the weakness helped pull the Standard & Poor's 500 index to its first weekly loss in the last four.

The S&P 500 dipped 3.54 points, or 0.1 percent, to close at 2,390.90, part of a 0.3 percent loss for the week. The index is still within half a percent of its record, though, and the market continues to make only modest moves through what's become a weekslong, peaceful lull.

The Dow Jones industrial average fell 22.81 points, or 0.1 percent, to 20,896.61, and the Nasdaq composite rose 5.27 points, or 0.1 percent, to 6,121.23. Small-company stocks fell more than the rest of the market. The Russell 2000 index lost 7.43 points, or 0.5 percent, to 1,382.77.

The biggest loss in the S&P 500 came from Nordstrom, which plunged $5.01, or 10.8 percent, to $41.20 after it said a key sales figure weakened last quarter by more than analysts expected. Nordstrom joined a long list of other department-store chains that have reported discouraging results recently, as their customers increasingly head online.

J.C. Penney fell 74 cents, or 14 percent, to $4.55 after it reported a loss for its latest quarter and weaker revenue than analysts expected.

The broader market, though, was much more pacific. It was the 13th straight day that the S&P 500 moved by less than 0.5 percent, the longest such streak since 1995.

"It's extremely calm, which always makes us a little nervous," said Eric Marshall, portfolio manager at Hodges Capital Management. "We're in a very narrow market and a very thin market: It's hard to buy things, and it's hard to sell things because the amount of trading volume out there has slowed down in recent weeks."

The market has grown sleepier as companies have reported stronger-than-expected profits and as encouraging data lifted optimism about the global economy. The calmness also comes despite a spate of political jolts, including concerns about how successful Republicans in Washington will be at pushing through the pro-business changes that many investors are expecting.

A government report on Friday showed that shoppers picked up their spending at auto dealers, hardware stores and online shops last month, and retail sales rose 0.4 percent from March. That was below economists' expectations, but it's an acceleration from weak levels registered earlier in the year. It also may be an indication that the economy will indeed pick up from its early-year torpor, as many economists predict.

Consumer prices also picked up a bit of momentum in April. Prices rose 0.2 percent last month, following a drop of 0.3 percent in March, as energy prices climbed higher. But after excluding energy and food prices, inflation was weaker last month than economists were expecting.

The Federal Reserve is paying close attention to inflation as it raises interest rates off their record lows, particularly where it is after excluding energy and food prices, which can be volatile.

Bond yields dropped as Treasury prices rose. The yield on the 10-year Treasury fell to 2.32 percent from 2.40 percent late Thursday. The two-year yield dropped to 1.28 percent from 1.34 percent, and the 30-year yield fell to 2.99 percent from 3.03 percent.

Bank stocks have recently been trading in the opposite direction of Treasury yields, because a pickup in interest rates would allow banks to make bigger profits from making loans.

Financial stocks in the S&P 500 fell 0.5 percent, second-most among the 11 sectors that make up the index.

On the winning side were utilities, whose relatively big dividends look more attractive when bonds are paying less in interest.

In European markets, the French CAC 40 rose 0.4 percent, the German DAX gained 0.5 percent and the FTSE 100 in London picked up 0.7 percent. In Asia, Japan's Nikkei 225 fell 0.4 percent, South Korea's Kospi fell 0.5 percent and the Hang Seng in Hong Kong ticked up by 0.1 percent.

Benchmark U.S. crude oil rose a penny to settle at $47.84 a barrel. Brent crude, the international standard, rose 7 cents to $50.84 a barrel.

Natural gas rose 5 cents to $3.42 per 1,000 cubic feet, heating oil was close to flat at $1.49 per gallon and wholesale gasoline rose a penny to $1.58 per gallon.

Gold rose $3.50 to settle at $1,227.70 per ounce, silver gained 14 cents to $16.40 per ounce and copper added 2 cents to $2.52 per pound.

The euro rose to $1.0931 from $1.0866 late Thursday. The dollar slipped to 113.29 Japanese yen from 113.88 yen, and the British pound slipped to $1.2886 from $1.2890.