By Yasin Ebrahim
Investing.com – The Dow bounced back from session lows on Friday, as rising consumer staples and materials lifted sentiment following a slump in retail sales and fears about rising U.S.-China tensions.
Dow Jones Industrial Average rose 0.30%, or 72 points, but had been down about 271 points at the lows of the day, the S&P 500 gained 0.25%, while the Nasdaq Composite added 0.43%.
Consumer staples, which often serve as the defensive corner of the market, helped spark a bounce in the broader market, led by PepsiCo (NASDAQ:PEP), Estee Lauder (NYSE:EL) and spirits company Brown Forman (NYSE:BFb), with latter up more than 3%.
The move into more defensive stocks comes as investors digested further economic data underscoring the impact of the Covid-19 pandemic, with retail sales falling more than expected last month.
The Commerce Department said on Friday that retail sales fell 16.4% last month, worse than the 12% decline expected.
The retail sales control group, which has a larger impact on U.S. GDP, fell 15.3%.
But some on Wall Street expect retail sales to bounce back as the recent wave of stimulus and pent-up demand will spur consumer spending.
"The pronounced weakness in April sales sets the stage for a bounce in May spending, which could be significant," Jefferies (NYSE:JEF) said in a note. "There is near-term support from stimulus payments which were largely saved in April, and a good deal of pent-up demand."
Stocks were also helped by a rise in materials with Freeport-McMoran Copper & Gold (NYSE:FCX) leading the pack as traders bet on an improved outlook for the sector following data showing industrial activity in China rebounded more sharply than expected last month.
Signs that China, the world's largest oil importer, is on the road to economic recovery sparked hopes that Beijing's appetite for crude will continue and help steady oil demand, which has been hit hard by the pandemic. Data released on Friday showed China’s daily crude oil use rebounded in April.
Oil prices jumped 6%, pushing energy stocks more than 0.5% higher.
Technology, which has played a pivotal role in the rally off the March lows, remained under pressure, paced by falling chip stocks as the White House reportedly is looking to block U.S companies from supplying China''s Hauwei.
"The Bureau of Industry and Security is amending its longstanding foreign-produced direct product rule and the Entity List to narrowly and strategically target Huawei’s acquisition of semiconductors that are the direct product of certain U.S. software and technology," The Commerce Department said.