Dow sheds more than 200 points despite strong retail sales, September slog

The Dow Jones Industrial Average slipped Thursday despite better-than-expected August retail sales, as the latest weekly jobless claims report pointed to a mixed economic picture.

The blue-chip average shed about 250 points, or 0.7%. The S&P 500 fell 0.7%. The Nasdaq Composite dipped 0.6%.

August retail sales surprised the market and rose 0.7% from the month prior, the Census Bureau reported Thursday. Economists surveyed by Dow Jones expected a 0.8% month-over-month decline.

However, the retail sales beat came after the initial estimate for July was revised down sharply from a month-over-month gain of 0.5% to a decline of 1.8%.

Meanwhile, the latest unemployment insurance weekly data showed 332,000 first-time jobless claims last week. Economists polled by Dow Jones expect a total of 320,000 initial claims.

“People are starting to see that some of the economic data that we’ve received lately has been affected by delta and are probably waiting for some of the effects of that to roll off,” said Victoria Fernandez, chief market strategist at Crossmark Global Investments. “I think we’re going to see a little bit of ‘two steps forward, one step back’ in the markets over the next few weeks.”

Mining names Freeport-McMoRan and Newmont were the biggest laggards on the S&P 500, down about 7% and roughly 4% respectively.

Energy names, which popped the day prior, edged down with the Energy Select Sector SPDR ETF down more than 1%.

On the upside, Moderna shares rose after the company released more data on breakthrough Covid cases that supports the push for the wide use of vaccine booster shots.

Despite a rebound on Wednesday, the S&P 500 and the Dow are still in the red for September. After seven straight months of gains for the S&P 500 and a near 20% rally to records this year, many on Wall Street expect bumpier trading and lower returns for the rest of the year.

History is also not on the market’s side as September tends to be a typically negative month for stocks. The S&P 500 has fallen 0.56% during the month on average since 1945, according to data from CFRA.

Friday begins a historically weak period for stocks as those September losses typically come in the back half of the month.

“The wall of worry is becoming increasingly challenging to climb, with rising depth and breadth of concerns and a potentially tired market,” said Mark Hackett, Nationwide’s chief of investment research.

“The stress factors facing the market have not materially changed, including the Delta variant, earnings headwinds from supply chain and labor challenges, fiscal and monetary tailwind shifting to headwinds and bubbling concerns around China,” Hackett said.

Another reason why the back half of September could be volatile is due to so-called quadruple witching occurring at the end of the week as stock and index futures and options are set to expire on the same day.