The Dow Jones Industrial Average gave up an early gain scored after August retail sales showed an unexpected rise and a measure of activity in the Philadelphia Federal Reserve district came in stronger than expected, with equities trading modestly lower Thursday morning.

What’s happening

The Dow

fell 176.22 points, or 0.5%, to 34,638.17.

The S&P 500

was down 27.32 points, or 0.6%, at 4,453.38.

The Nasdaq Composite

shed 85.45 points, or 0.6%, to trade at 15,076.08.

On Wednesday, the Dow industrials rose 236.82 points, or 0.7%, to 34,814.39, the S&P 500

rose 0.9%, and the Nasdaq Composite

gained 0.8%.

What’s driving markets

Data showed August retail sales rose 0.7%, defying forecasts for a 0.7% fall. Excluding autos, sales jumped 1.8%, compared with expectations for a rise of 0.2%.

Separately, the Philadelphia Fed’s activity index jumped to 30.7 in September from 19.4 a month earlier. At the same time, data showed first-time claims for unemployment benefits rose more than expected in the week ending Sept. 11, though continuing claims fell.

“Fears that a collapse in consumer sentiment would cut retail sales have not yet been confirmed. Other indicators released at the same time as the sales report also give hope for the better,” said Alex Kuptsikevich, senior market analyst at FxPro, in emailed comments.

But equities struggled to rally, eventually drifting into negative territory. Analysts noted that the headline rise in retail sales was offset partially by downward revisions to the July data.

Meanwhile, the “renewed pickup in spending on goods, ex-autos, will potentially add to the widespread shortages seen in recent months, putting upward pressure on prices, while the flatlining of spending in restaurants and bars suggest that the broader recovery in services consumption probably faltered,” said Michael Pearce, senior U.S. economist at Capital Economics, in a note.

While the coronavirus delta variant has hit some U.S. states hard, the debate over the need for booster shots continues, with the Food and Drug Administration saying the currently administered vaccines provide sufficient protection against severe disease and death from COVID-19, while vaccine maker Moderna Inc.

says effectiveness wanes over time.

Historically September tends to be a weak month for U.S. stocks and the Dow is down 1.55% through first 10 trading days of September, while the S&P 500 is down 0.93%, according to Dow Jones Market Data. Friday also brings the so called quadruple witching day when stock options, single stock futures, stock-index futures and stock index options all expire which sometimes creates some volatility.

See: Stock-market investors brace for ‘quadruple witching’ this Friday

Which companies are in focus?

Shares of Cisco Systems Inc.

fell 0.4% after the company late Wednesday forecast revenue will grow 5% to 7% over its next four fiscal years, easily outpacing analysts’ projections. 

Beyond Meat Inc.

shares fell 5.5%, after Piper Sandler analyst Michael Lavery turned bearish on the plant-based meat company, citing a weaker growth outlook and concern the outlook for food service sales may be overly optimistic.

AMC Entertainment Holdings Inc.

announced in August it would accept bitcoin

for online ticket and concession purchases before the end of the year. In a Wednesday tweet, the Chief Executive Adam Aron said Ethereum

and Bitcoin Cash

would also be accepted. Shares were up 0.5%, after dropping 9.4% the previous two sessions.

What are other markets doing?

The yield on the 10-year Treasury note

rose 2.6 basis points to 1.333%. Yields and debt prices move in opposite directions.

The ICE U.S. Dollar Index
a measure of the currency against a basket of six major rivals, jumped 0.4%.

Oil futures pulled back from a seven-week high, with the U.S. benchmark

down 0.9% at $71.94 a barrel. Gold futures

were also lower as the dollar gained ground, falling 2.3% to $1,753 an ounce.

In European equities, the Stoxx Europe 600

rose 0.6% and the FTSE 100

gained 0.3%.

In Asia, the Shanghai Composite

fell 1.3%, Hong Kong’s Hang Seng Index

dropped 1.5% and Japan’s Nikkei 225

lost 0.6%.

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