On the heels of Thursday's modest losses, the stock market is indicated to start today's session on a modestly lower note as well. Currently, the S&P futures are down two points and are trading 0.1% below fair value.
The lackluster disposition is a byproduct of valuation concerns, which I have highlighted in The Big Picture column this week, as well as the continued sales travails of the mall-based retailers, which have been on full display the past few days following earnings reports from Macy's (M), Kohl's (KSS), Nordstrom (JWN), J.C. Penney (JCP), and a sales update from Hudson Bay (HBAYF), which counts Saks Fifth Avenue among its department store brands.
Separately, the headline rancor out of Washington has stifled some of the market's bullish enthusiasm, as it has left participants in a bit of a quandary about the fate of tax reform.
This morning's economic data, however, isn't creating too many quandaries about the condition of the U.S. economy, which is neither great nor bad. It isn't just right, though, either, not with all of the monetary stimulus that has been provided and the recurring reports of job growth that have been accompanied by weak productivity and wage growth numbers.
The numbers seen today emanate from the CPI and Retail Sales reports for April.
Retail sales increased 0.4% (Briefing.com consensus +0.6%) on the heels of an upwardly revised 0.1% increase (from -0.3%) for March. Excluding autos, retail sales rose 0.3% (Briefing.com consensus +0.5%) after jumping an upwardly revised 0.3% (from +0.2%) in March.
The overall growth in retail sales was aided by a 0.7% increase in auto sales, as well as a nice jump in sales at electronics and appliance stores (+1.3%), building material and garden equipment and supplies dealers (+1.2%), and nonstore retailers (+1.4%).
The key takeaway from this report is that it puts consumer spending on a path toward being a much better contributor to second quarter real GDP growth than it was in the first quarter.
The CPI data, meanwhile, was pretty much in-line with expectations. The all items index increased 0.2% (Briefing.com consensus +0.2%) while the all items index, excluding food and energy, increased 0.1% (Briefing.com consensus +0.2%).
The uptick in the all items index was led by the energy index (+1.1%), yet increases in the indexes for shelter, tobacco, and food also played a part.
The shelter index (+0.3%) drove the gain in the all items index, excluding food and energy, which saw its gain restrained by price declines in many indexes, including wireless phone services, medical care, apparel, used cars and trucks, new vehicles, motor vehicle insurance, and recreation.
On a year-over-year basis, the all items index was up 2.2%, versus 2.4% for the 12 months ended March and the 1.7% average annual increase over the last 10 years. The all items index excluding food and energy was up 1.9%, versus 2.0% for the 12 months ended March and the average annual increase of 1.8% over the past decade.
The key takeaway from the CPI report is that consumer inflation pressures moderated a bit in April. That won't change the thinking that the Fed will raise rates at its June meeting, yet it will temper concerns about the Fed possibly needing to be more aggressive with its rate hikes.
Aggressive isn't a word being attached to the stock market at the moment. On the contrary, passive is more like it as the broader market has been stuck in a narrow range since the start of March with neither buyers nor sellers showing much conviction, which is again the case before today's open.