Stock market retreats as investors keep one eye on coronavirus

Stocks slumped in Friday afternoon trade after bouncing between small gains and losses earlier, as investors parsed mixed data on the strength of the U.S. consumer. Investors were watching the spread of COVID-19 in China and corporate earnings season move toward the home stretch.

What are major indexes doing?

The Dow Jones Industrial Average DJIA, -0.29% was down 100 points, or 0.3%, at about 29,324, while the S&P 500 SPX, -0.03%  edged 0.1%, about 2 points, lower at 3,372. The Nasdaq Composite COMP, +0.02% slipped 3 points to trade near 9,708, about a 0.1% decline.

All three benchmark indexes touched all-time highs earlier in the week. For the week, the Dow looked likely to add 0.8%, the S&P 500 on track to advance 1.3%, and the Nasdaq to gain 1.9% for the period.

What’s driving the market?

Some cracks in what has been a seemingly impregnable segment of the U.S. economy — the U.S. consumer — in a record-setting 11th year of economic expansion has caused investors to second-guess a mostly bullish uptrend for stocks this week. Some seeds of doubt were sown on Friday after a report on January retail sales showed sluggish activity, underscored by a 3.1% drop in sales at clothing stores.

Retail sales rose 0.3% in January, the government said, matching the MarketWatch consensus forecast.

“The market’s resilience in the past couple of year has been predicated on the belief that the consumer will continue to do well—although retail data has been mixed in that regard,” said John Carey, director of equity income for the U.S. at Amundi Pioneer, in an interview with MarketWatch.

The weaker-than-expected report on retail sales comes even as a separate measure of consumer sentiment surged above expectations to touch a near 15-year high in a preliminary February reading.

“It’s something that could undermine the market as we move forward, if the consumer pulls back,” Carey said, adding that capital spending by companies has been sluggish, while data on car and home sales also have shown signs of having reaching a plateau.

In other data, import prices rose 0.2% during the month, according to a separate government report, and have gained 0.3% in the past 12 months. Meanwhile, industrial production marked its fourth decline in five months in January, the Federal Reserve said falling 0.3%, in line with Wall Street expectations. Separately, the Commerce Department said business inventories rose a scant 0.1% in December.

However, concerns about the viral outbreak in China linger. Chinese officials on Friday said 121 more people had died from COVID-19, the disease caused by a novel strain of coronavirus that emerged in Wuhan in late 2019, over the previous 24 hours, bringing the total to 1,383. The country’s National Health Commission reported 5,090 new confirmed cases in mainland China, bringing the total to 63,851. The number of new cases jumped sharply on Thursday after a change in the government’s counting method.

Analysts said the changes to the methodology were fueling doubts about the accuracy of China’s figures.

Cleveland Federal Reserve Bank President Loretta Mester said the drag of the coronavirus on China could spill over to the U.S., in an interview with Bloomberg TV Friday.

Which companies are in focus?
What are other markets doing?

Oil continued to power higher. The price of a barrel of West Texas Intermediate crude for March delivery CLH20, +1.11% was 50 cents, or less than 1%, higher on the New York Mercantile Exchange. WTI has gained 3.5% in the week to date.

Gold for April delivery GCJ20, +0.47% rose 0.5% to $1,586.80 and was on track for a weekly gain on haven buying.

The U.S. dollar DXY, +0.05% was less than 0.1% higher against a basket of rival currencies.

In Europe, the Stoxx Europe SXXP, -0.13% slipped 0.6% to end trade at 430.52.

In Asia overnight, the China CSI 300 000300, +0.70%  rose 0.7% to close at 3,987.73, the Shanghai Composite SHCOMP, +0.38%  ticked up 0.4% to 2,917.01, and the Hang Seng Index HSI, +0.31% closed 0.3% higher, at 27,815.60. The Nikkei 225 NIK, -0.59% lost 0.6% to 23,687.59.

The benchmark U.S. 10-year Treasury note TMUBMUSD10Y, -1.89% caught a bid, with the yield shedding 4 basis points to 1.58%. Bond yields fall when prices rise.

—William Watts contributed to this article

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