Stocks whipsaw after weak consumer-confidence reading rattles investors

Advertisement
Stocks whipsaw after weak consumer-confidence reading rattles investors

FILE - In this Aug. 21, 2019, file photo specialist Anthony Matesic, center, works with traders at his post on the floor of the New York Stock Exchange. The U.S. stock market opens at 9:30 a.m. EDT on Wednesday, Aug. 28. (AP Photo/Richard Drew, File)

Advertisement
  • Stocks ended August with a volatile day of trading on Friday, as a decline in a key consumer-confidence gauge offset earlier gains that had been sparked by increased optimism around trade.
  • Markets opened higher on Friday after China's Foreign Ministry said the US and China were maintaining "effective communication."
  • Most of those gains were lost after the University of Michigan's consumer-sentiment index posted its largest monthly decline since 2012 in August.
  • Visit the Markets Insider homepage for more stories.

Stocks closed out a bumpy August with a turbulent day of trading on Friday as a weak consumer-confidence reading outweighed positive developments in trade talks between the US and China.

Major US indexes began Friday trading higher after China's Foreign Ministry said the two countries were maintaining "effective communication." The news continued to soothe concerns of a prolonged trade war between the world's two largest economies.

The early gains were reversed after the University of Michigan said its consumer-sentiment index recorded its largest monthly decline since 2012 in August. The gauge fell to the lowest level since October 2016 sinking to 89.8 in August. The index stood at 98.4 in July, and the university's preliminary measurement for August was 92.1.

The drop in consumer confidence is a red flag for investors as the healthy US consumer has been considered a bright spot in otherwise disappointing economic data from around the world.

Advertisement

A key gauge of US manufacturing fell for the first time in a decade in August, and a closely-watched segment of the yield curve has inverted for several time this month. The occurrence is often viewed as a harbinger of a recession, as it has preceded every downturn since 1950.

Here's a look at the major indexes as of the 4 p.m. close on Friday:

Ulta Beauty lost more than a quarter of its market value after posting disappointing earnings results for the second quarter. The beauty retailer's shares plummeted lowered its full-year sales guidance as well, citing a general lack of "newness and innovation" in its cosmetics business.

Shares of Tesla rose as much as 4% after China said it planned to exclude most of the company's vehicles from a purchase tax. The news comes on the back of Tesla raising the prices of its vehicles in China following the yuan sinking to its lowest level in close to a decade.

Within the S&P 500, these were the largest gainers:

Advertisement

And the largest decliners:

Within the S&P 500, gains in materials, industrials, and financials were offset by declines in consumer discretionary, consumer staples, and communications.

{{}}