By Avinash P and Purvi Agarwal
Aug 14 (Reuters) – Wall Street’s main indexes were set for a muted open on Friday, a day after the S&P 500 closed at a record high, as investors assessed retail sales data and took stock of the latest developments in the Middle East.
Retail sales dropped 0.6% last month after an unrevised 0.2% gain in June, the Commerce Department’s Census Bureau said on Friday. Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, edging up 0.1%.
“The reports this week actually give the (Fed) committee a lot more optionality … and not disappoint the markets,” said Bob Lang, founder and chief strategist at Explosive Options
“If they raise rates at the next meeting, it’s not going to be a horrible thing … If they do not change policy, it means that they have confidence that inflation trends are moving in the right direction.”
Benign producer and consumer inflation data earlier this week have eased some concerns about a Federal Reserve interest-rate hike in September, powering the S&P 500 index, which is on track for a third consecutive weekly gain alongside the Nasdaq, their longest winning streak since early April.
However, the Middle East conflict continued to weigh on investor sentiment after transit through the Strait of Hormuz appeared to have come to a near standstill after two more ships were attacked there and the U.S. said it could maintain a naval blockade of Iran indefinitely.
Investors may be becoming desensitized to geopolitical shocks, but central banks cannot yet dismiss the latest developments, said Elwin de Groot, Rabobank’s head of macro strategy.
With energy prices remaining elevated and Federal Reserve Chair Kevin Warsh offering little guidance on the central bank’s next move, investors are scrutinizing economic data more closely.
At 08:54 a.m. ET, Dow E-minis were down 68 points, or 0.13%, and S&P 500 E-minis were up 8.25 points, or 0.11%. Nasdaq 100 E-minis were up 87.25 points, or 0.29%.
In premarket movers, Applied Materials fell 6%, even after the chip equipment maker forecast fourth-quarter revenue above Wall Street estimates. The stock has more than doubled so far this year.
Investors have sold AI-linked stocks at the first sign of slowing growth, even when companies reported strong results and upbeat forecasts, while rewarding those whose AI investments have produced clear returns.
Reddit jumped over 11% after the social media company was selected to join the S&P 500 index, effective August 18.
Fox Corp’s Class A shares gained 3.1% after J.P. Morgan upgraded the media company to “overweight” from “neutral.”
Shares of some drone makers gained after President Donald Trump said late on Thursday that he would impose tariffs on imports of drones and their components.
Red Cat jumped 11.1%, Unusual Machines added 17.9% and AeroVironment gained 5.9%.
Chicago Fed President Austan Goolsbee said late on Thursday the latest U.S. inflation data has been “a little better,” and that he was hopeful inflation could continue to improve.
Comments from Atlanta Fed interim President Cheryl Venable and a preliminary University of Michigan consumer sentiment reading will be closely watched later in the day.
(Reporting by Avinash P and Purvi Agarwal in Bengaluru; Editing by Tasim Zahid and Anil D’Silva)
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