Global markets felt a reprieve on Thursday after China defended its recent yuan action, but Wall Street wavered as traders weighed positive U.S. economic data against the Chinese central bank’s comments.
Continue Reading Below
The Dow Jones Industrial Average was 7 points higher, or 0.04% to 17408. The S&P 500 fell 2 points, or 0.13% to 2083, while the Nasdaq Composite declined 10 points, or 0.21% to 5033.
After a more than 3% drop over two days in the yuan’s value, turmoil in global markets calmed on Thursday after the People’s Bank of China, in a rare press conference, defended its recent action. The central bank said that there’s no reason for the nation’s currency to continue falling. Traders took the comments to heart as markets around the world turned higher.
Asia markets ended the session on an upbeat note. The Shanghai Composite index rallied 1.76%, Hong Kong’s Hang Seng rose 0.43%, while Japan’s Nikkei closed 0.99% higher.
European stock markets, however, pared big gains from earlier in the session. The Euro Stoxx 50, which tracks large-cap companies in the Eurozone, rose 0.83%. The German Dax rose 0.73%, the French CAC 40 was 1.06% higher, while the UK’s FTSE ended flat.
Anthony Valeri, investment strategist for LPL Financial, said the markets in the U.S. are still trying to make sense of China’s currency devaluation and what it means for them.
“The market reaction has been a little exaggerated, I think,” he said. “The 2% devaluation given the strength over the last year is fairly minor…there’s been lots of questions about whether that offsets the Fed and there’s been no news that it will. Markets are still operating on the assumption the Fed won’t react to China.”
The U.S. dollar rose against most major world currencies. Against the yuan, the greenback climbed 0.19% to 6.39. Meanwhile, the yield on the benchmark 10-year U.S. Treasury fell 0.039 of a percentage point to 2.170%
Focus in the U.S. is returned to the American economy after a closely-watched report from the Commerce showed retail sales rebounded in July. Sales rose 0.6% for the month, higher than the 0.5% expected climb. Excluding the volatile auto component, sales were up 0.4%, which was in line with expectations.
“The retail sales data was good, but not spectacular. Given the market’s shaken confidence, I think it was looking for a stronger release. But on balance, it was a strong report that suggests growth of about 2% -3% for the economy, which is ultimately good for stocks,” Valeri said.
The consumer discretionary sector performed the best of all ten S&P 500 sectors on the back of the report, as names like Lowe’s (NYSE:LOW) and Home Depot (NYSE:HD) traded up about 0.58%.
Elsewhere on the economic data front, the Labor Department reported the latest import, export figures in the U.S. Import prices fell 0.2% for the month, a slower decline than the 0.3% slide Wall Street expected. Export prices also declined, notching a 0.9% drop – though it was less than the 1.1% fall forecasted.
Weekly jobless claims data showed the number of Americans filing for first-time unemployment benefits rose to 274,000 last week from a downwardly revised 269,000 the week prior. Wall Street expected claims to hold steady at an initially reported 270,000.
On the corporate news front, a week after reporting a bigger-than-expected quarterly loss, Tesla (NASDAQ:TSLA) said it expects to raise $500 million by selling 2.1 million of its shares. It plans to allocate more money to its energy business, Model 3 project, and Gigafactory.
Coca-Cola announced on Thursday it appointed a new president and chief operating officer. The beverage giant appointed James Quincey, formerly the company’s Europe Group president, to oversee Coke’s global operations. The c-suite shakeup is effective immediately.
Shares of Shake Shack (NYSE:SHAK) tumbled as much as 9% after the company said late Wednesday it priced a secondary offering of four million class A common stock at $60 a share.
In commodities, after wild swings to start the week, U.S. crude oil prices continued to drop, settling at the lowest level since March 2009. It was down 2.47% to $42.23 a barrel. Brent, the international benchmark, fell 0.89% to $49.22.
The energy sector declined 1.34% as big names in energy like Chevron (NYSE:CVX) paced lower.
Gold declined 0.67% to $1,115 a troy ounce. Copper, meanwhile, reversed course to trade to the upside. It was up 0.21% to $2.36 a pound.