S&P 500 posts fifth consecutive day of gains

U.S. equities pushed higher Thursday as investors digested disappointing holiday sales results from several major retailers and a slew of commentary from Federal Reserve Chairman Jerome Powell.

The S&P 500 (^GSPC) rose 0.45%, or 11.68 points, as of market close, ending higher for its fifth day in a row for the first time since September. The Dow (^DJI) advanced 0.51%, or 122.8 points, while the Nasdaq (^IXIC) rose 0.42%, or 28.99 points.

Earlier in the session, global equities wobbled as China’s most recent inflation data missed expectations. China’s December consumer price index, a metric for prices of goods and services, rose just 1.9% over last year, falling short of expectations of an increase of 2.1% and the previous month’s reading of 2.2%. And the producer price index rose 0.9%, falling short of the 1.6% expected by economists and the 2.7% year-over-year increase from November.

These results follow disappointing data from the country’s manufacturing sector, with factory activity contracting in December for the first time since May 2017 as the ongoing trade war between the U.S. and China weighs on producers.

Delegations from the U.S. and China wrapped up three days of mid-level trade meetings on Wednesday, with the discussions lasting a day longer than initially expected. The office of the U.S. Trade Representative released a brief statement following the conclusion of the meeting, asserting that the meetings touched on the Trump administration’s concerns over “forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft of trade secrets for commercial purposes, services, and agriculture” with China.

China’s Ministry of Commerce on Thursday also released a statement saying that the two sides agreed to remain in close contact following the meetings in Beijing.

Federal Reserve speeches

The Federal Reserve will be a main focus for investors on Thursday as Federal Reserve Chairman Jerome Powell and Vice Chairman Richard Clarida each deliver speeches. Powell spoke at the Economic Club of Washington, D.C. Thursday afternoon and reiterated sentiments reflected in the Federal Open Market Committee’s latest meeting minutes suggesting that the central bank can be “patient” when it comes to future rate hikes. However, he also added that he is “very worried” about rising U.S. debt and noted separately that a prolonged government shutdown could negatively impact the U.S. economy.

Clarida speaks at 7 p.m. ET at the Money Marketeers of New York University.

Yesterday, the Federal Open Market Committee’s minutes from its December meeting were released. These showed that several members did believe the bank should pause on rate hikes to reassess economic conditions, and suggested the central bank is considering market concerns of “the possibilities of a sharper-than-expected slowdown in global economic growth, a more rapid waning of fiscal stimulus, an escalation in trade tensions, a further tightening of financial conditions, or greater-than-anticipated negative effects from the monetary policy tightening to date.”

“Many participants expressed the view that, especially in an environment of muted inflation pressures, the Committee could afford to be patient about further policy firming,” according to the minutes.

STOCKS: Retail stocks slide after reporting holiday sales

Shares of retail and department store stocks took a beating after the companies reported sales results for November and December. The results painted a mostly dim picture of retail health coming out of the holiday season. The S&P 500 Retail ETF (XRT) declined 1.6% as of market close.

Kohl’s Corp. (KSS) reported holiday sales growth of just 1.2% for November and December. This was considerably weaker than the department store’s comparable sales growth of 6.9% for the same period last year. The company also raised the lower end of its full-year earnings per share guidance and now expects a band of $5.50 to $5.55 per share from $5.35 to $5.55 per share previously. Shares of Kohl’s declined 4.79% to $66.55 each as of market close.

Macy’s (M) reported owned comparative sales growth of 0.7%, and owned plus licensed comparable sales growth of 1.1% for the November and December shopping season. However, the department store cut its full-year 2018 EPS guidance to $3.95 to $4.00 per share, from $4.10 to $4.30 per share previously. The company said it will “continue to take the necessary steps in January to ensure a clean inventory position as we enter fiscal 2019.” Shares of Macy’s slid 17.69% to $26.11 each as of market close.

L Brands (LB), the parent company for brands including Victoria’s Secret, reported flat comparable sales for the five weeks ending January 5 versus the five weeks ending January 6, 2018, missing consensus expectations calling for an increase of 3.4% for the period. Victoria’s Secret December comparable sales fell 6%, a sharper decline than the 1% decrease expected. The company raised its guidance for adjusted fourth-quarter EPS to the higher end of its previous guidance $1.90 to $2.10, which does not include a preliminary estimated pretax charge, principally non-cash, relating to its sale of La Senza of about $80 million, or 15 cents per share. Shares of L Brands fell 4.39% to $26.99 each as of market close.

Target (TGT) reported its comparable store sales grew 5.7% for the combined November and December holiday season as traffic, comparative digital sales and average ticket each rose. The company reaffirmed its full-year forecast of earnings per share between $5.30 to $5.50. Consensus expectations are for full-year EPS of $5.45, according to Bloomberg data. While Target reported relatively strong comparable store sales growth for the holiday season, its shares declined amid weak results from peer retailers. Shares of Target slipped 2.85% to $68.29 each as of market close.

ECONOMY: New jobless claims fell more-than-expected in first week of January

Initial jobless claims totaled 216,000 for the week ending January 5, according to a statement from the U.S. Department of Labor. Consensus expectations were for new unemployment claims to total 226,000 for the week. The previous week’s initial jobless claims were upwardly revised to 233,000, from 231,000 previously.

Continuing unemployment claims for the week ending December 29 also came in lighter-than-expected at 1.722 million versus 1.74 million anticipated by economists. The previous week’s continuing unemployment claims were upwardly revised to 1.75 million.

The results point to strength in the labor market consistent with last week’s jobs report from the Bureau of Labor Statistics, which reported that the U.S. economy added 312,000 jobs in December versus 184,000 expected. However, the unemployment rate rose to 3.8% from 3.7% in November, but this was driven by an increase in labor force participation.

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

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