Stocks fell on Friday after retail sales data came in better than expected, while consumer confidence from the University of Michigan came in at its best level since July 2013.
First, the scoreboard:
- Dow: 16,980.95, -68, (-0.4%)
- S&P 500: 1,984.98, -12.5, (-0.6%)
- Nasdaq: 4,564.96, -26.9, (-0.6%)
And now, the top stories on Friday:
1. Retail sales in August grew 0.6% according to the latest monthly report from the Census Bureau. This result was in-line with expectations. Following the report, Ian Shepherdson at Pantheon Macroeconomics said, “In one line: Solid, especially when revisions taken into account. August retail sales rose 0.6%, in line with the consensus. Sales ex-autos rose 0.3%, also matching expectations. But note the +0.5% revision to prior data, making the net report stronger than expected and lifting the y/y rate to 5.0% from 4.2% in July.”
2. The preliminary September report on consumer confidence from the University of Michigan showed confidence rose to 84.6 from 82.5 in August. This also beat expectations for a reading of 83.5, and marked the highest reading since July 2013. Following the report, Paul Diggle at Capital Economics said, “Indeed, with the economic recovery continuing to gather pace and wage growth soon to strengthen, this measure of consumer confidence may soon follow the alternative Conference Board index back up to pre-recession levels… The rise in consumer confidence in September adds to the evidence from August’s upbeat retails sales report that third quarter consumption growth will come in stronger than we initially expected. It looks like the economic recovery has a good deal of momentum.”
3. Darden Restaurants was in focus on Friday after activist hedge fund Starboard released a 294-slide presentation outlining ways to transform the company, namely its Olive Garden restaurant franchise. The presentation covered nearly every aspect of the company’s business, from how it executes its unlimited salad and breadsticks promotion, to how the company cooks its pasta, to discrepancies in how Olive Garden’s food appears in promotions and in person. Darden shares fell more than 1.5% on Friday.
4. Among the biggest gainers on Friday was digital marketing firm Conversant, which gained 30% after announcing a deal to be acquired by Alliance Data Systems for $US2.3 billion, or $US30 per share. Also higher were shares of Ulta Salon, which gained more than 17% after the company reported earnings that beat expectations.
5. According to The Wall Street Journal, activist investor Dan Loeb raised $US2.5 billion in just two weeks during August, with Loeb planning to use the capital by the end of the year to take activist stakes in companies in the U.S. and abroad.
6. The U.S. announced new sanction against Russia on Friday in a move aimed squarely at crippling the nation’s $US425 billion petroleum industry by limiting oil exploration. BI’s Brett LoGiurato, citing a senior Obama administration official on Friday, reported that the measures are “designed to effectively shut down this type of oil exploration and production activity by depriving these Russian companies of the goods, technology, and services that they need to do this work.”