Stocks Are Lower, Dow Down 90 Points

Oscar PistoriousREUTERS/Kim Ludbrook/PoolOlympic and Paralympic track star Oscar Pistorius reacts as he listens to Judge Thokozile Masipa’s judgement at the North Gauteng High Court in Pretoria, September 11, 2014.

Stocks were lower on Friday after economic data earlier in the day showed retail sales grew in-line with expectations in August while consumer confidence topped expectations.

The Dow was down 91 points, the S&P 500 was down 13 points, and the Nasdaq was down 28 points.

Earlier on Friday, we got the monthly report on retail sales, which showed sales rose 0.6% in August, in-line with expectations. July’s sales were also revised higher, to 0.3% from 0%.

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.”

The preliminary University of Michigan consumer confidence survey for September came in better than expected. The report showed consumer confidence came in at 84.6 against expectations for 83.5. This is also higher than the 82.5 reported in August.

Ian Shepherdson at Pantheon Macroeconomics said, “In one line: Better, but still not good enough… All the increase was in the expectations component, which rose to a 15-month high of 75.6 from 71.3. The index tends to reflect movements in gasoline prices and the stock market, so we expect a further gain next month.”

Following both data points, Paul Diggle at Capital Economics said, “The rise in consumer confidence in September adds to the evidence from August’s upbeat retails ales 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.”

Diggle also said these data points support his view that Q3 GDP growth will come in at 3.5%.

In stock news, hedge fund Starboard Value filed a 294-slide presentation outlining various initiatives it thinks Olive Garden-owner Darden Restaurants can undertake to improve profit as well as the customer experience.

Among Starboard’s suggestions is a rejiggering of its unlimited salad and breadsticks offering, in addition to saying that the company should prepare its pasta with salted water. In afternoon trade, Darden shares were down 1.5%.

Among the biggest gainers on Friday was Conversant, up about 30% after announcing a deal on Thursday night to be acquired by Alliance Data for $US2.3 billion, or $US35 per share.

Also higher was Ulta Salon, up 17% after announcing second quarter earnings per share that beat expectations.

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