Stock market news: October 16, 2019

Stocks were off slightly as investors considered a mixed batch of U.S. economic data, ongoing geopolitical concerns and more corporate earnings. Earlier in the session, the Dow briefly broke into positive territory.

Here’s where the markets settled at the end of regular equity trading.

  • S&P 500 (^GSPC): -0.2%, or 5.99 points

  • Dow (^DJI): -0.08%, or 22.82 points

  • Nasdaq (^IXIC): -0.3%, or 24.52 points

  • Crude oil (CL=F): +0.85% to $53.26 per barrel

  • Gold (GC=F): +0.69% to $1,493.80 per ounce

The U.S. House of Representatives on Wednesday passed a bill broadly supporting pro-democracy protestors in Hong Kong. As part of the Hong Kong Human Rights and Democracy Act, the State Department would be required to annually review whether the Hong Kong remained “sufficiently autonomous” from China to justify its special trading status with the U.S. Hong Kong protestors had called for the passage of this legislation, with pro-democracy demonstrations now having continued more than four months in the region.

The bill, passed unanimously by voice vote in the House, lays a framework for sanctions agains officials deemed to undermine freedom and autonomy in Hong Kong. A similar bill is also before the Senate awaiting a floor vote.

China’s Foreign Ministry immediately condemned the House’s passage of the bill and threatened retaliation.

“If the relevant bill is finally passed into law, it will not only harm the interests of the Chinese side, but also damage Sino-U.S. relations, and it will seriously damage the interests of the United States,” China’s Foreign Ministry spokesperson said in a statement, according to a translation. “With regard to the wrong decision of the U.S. side, China will surely take effective measures to resolutely counteract and firmly safeguard its sovereignty, security, and development interests.”

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., October 9, 2019. REUTERS/Brendan McDermid

The rhetoric underscores a broadening scope of issues in which the U.S. and Chinese sides have been at odds, and raises the specter of further complications in trade negotiations.

Meanwhile, brinkmanship continued for other global geopolitical negotiations. European stocks were mixed as prospects for reaching a Brexit deal before a summit in Brussels with EU officials later this week dimmed. British and EU officials had resumed talks on Wednesday after a round of talks that went late into Tuesday, but major sticking points still remain, including whether to retain Northern Ireland as part of the U.K. customs union.

The pound (GBPUSD=X) pared some losses mid-morning in New York to just over $1.27, but remained lower against the dollar from the previous day.

ECONOMY: Retail sales unexpectedly fall in September

Retail sales unexpectedly declined in September, the Commerce Department reported Wednesday, suggesting sluggishness in key domestic consumer activity. This marked the first drop in the headline measure of retail sales in seven months.

Inclusive of all categories, retail sales fell 0.3% in September from August, where an increase of this magnitude had been expected for the month, according to Bloomberg-compiled consensus data. However, August’s headline retail sales were upwardly revised to see a rise of 0.6%, from the 0.4% reported previously.

Beneath the headline, clothing and clothing accessory store sales led advances, with these rising 1.3% for the month. Non-store retailers – namely, e-commerce merchants – saw sales decline on a monthly basis for the first time since December, with these sales falling 0.3% in September.

Excluding more volatile auto and gas sales, retail sales were flat between August and September. Consensus economists had expected to see a gain of 0.3% in this metric. As with the headline figure, retail sales excluding autos and gas were upwardly revised to a 0.4% increase in August, versus the 0.1% reported earlier.

In the “core” retail sales figure – which excludes autos, gas, building materials and food sales – retail sales were unchanged between August and September, following an unrevised 0.3% gain in August. Many economists regard this as a better gauge of underlying buying trends, and it closely tracks GDP’s consumer spending component.

“The drop back in retail sales in September was partly driven by a price-related fall back in gasoline prices, but the fact that underlying control group retail sales were unchanged provides another clear sign that consumption growth is slowing,” Michael Pearce, senior U.S. economist for Capital Economics, wrote in a note Wednesday.

Other economists, however, questioned the credibility of the unexpected softness in September’s retail sales.

“These data are hard to square with the Redbook chainstore sales survey, which clearly suggests that September sales accelerated, presumably as people brought forward purchases in anticipation of higher prices in the wake of the tariffs on a wide range of consumer goods,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, said in an email. “But the retail sales numbers are biased to the downside at the initial print; upward revisions are more common than downward, and today’s numbers look prime candidates to be moved higher.”

Other data, however, was more upbeat, with more signs pointing to an improving domestic housing market.

The National Association for Homebuilders’s Housing Market index climbed to 71 in October, the highest level since early 2018. Consensus economists had expected that the print would remain unchanged from September’s level of 68.

The headline print comes in above 2018’s average reading of 67, and comes as other measures of housing market strength like housing starts and building permits have recently exceeded expectations.

“The housing rebound that began in the spring continues, supported by low mortgage rates, solid job growth and a reduction in new home inventory,” NAHB Chair Greg Ugalde said in a statement.

STOCKS: Bank of America tops expectations in quarterly results

Bank of America (BAC) topped the Street’s expectations on the top and bottom lines in results delivered Wednesday before market open, sending shares higher during Wednesday’s session.

The Charlotte, North Carolina-based bank delivered adjusted earnings of 75 cents per share on revenue of $23 billion, topping expectations for 69 cents on revenue of $22.85 billion, according to Bloomberg consensus data.

Results were driven by strong investment banking performance during the period, with third-quarter debt underwriting fees jumping 19%. Bank of America’s investment banking fee market share rose 80 basis points to 6.5% during the period.

“In a moderately growing economy, we focused on driving those things that are controllable,” Bank of America CEO Brian Moynihan said in a statement. “We made continued strong investments in our capabilities to serve customers, more relationship management teammates, more and refurbished branches and offices, and more digital capabilities, all while core expenses are flat.”

The results mirrored a strong quarterly performance by JPMorgan (JPM), which had also been led by a jump in investment banking revenue.

Netflix (NFLX) and IBM (IBM) are set to release quarterly results after market close Wednesday.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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