Wall Street Holds Near Record Friday   08/14 09:45

   U.S. stocks are drifting around their record heights Friday following the 
latest report on the economy to come in surprisingly weak, this time about how 
much shoppers are spending at retailers. 

   NEW YORK (AP) -- U.S. stocks are drifting around their record heights Friday 
following the latest report on the economy to come in surprisingly weak, this 
time about how much shoppers are spending at retailers. Such data could keep 
interest rates low, which is something Wall Street loves, but it also raises 
the risk of a worst-case economic scenario of slow growth and high inflation.

   The S&P 500 was virtually unchanged, coming off its all-time high set the 
day before. The Dow Jones Industrial Average was down 24 points, or less than 
0.1%, as of 10:30 a.m. Eastern time, and the Nasdaq composite was 0.2% lower.

   Treasury yields were also mixed in the bond market after a report showed 
shoppers spent less at U.S. retailers last month than the month before. That 
surprised economists, who were forecasting another month of growth.

   On the bright side for financial markets, such a pullback in spending could 
take pressure off inflation. Inflation remains much higher than anyone would 
like, but reports earlier this week suggested the pace of increases in prices 
is decelerating.

   If inflation keeps trending that way, it could encourage the Federal Reserve 
to hold off on hikes to interest rates. Higher rates would help keep a lid on 
inflation, but they do so by intentionally slowing the economy and making it 
more expensive for everyone to borrow money.

   But the downside of such data, including last week's surprisingly weak 
report on the U.S. job market, is that they also raise the risk of a slowing 
economy. The Fed has no good tool to fix both a stagnating economy and high 
inflation at the same time, which is why what's called "stagflation" is seen as 
a worst-case scenario.

   Some on Wall Street cautioned against overreacting to the weak data on U.S. 
retail sales, even if it was broad based. It could simply be a snap back after 
retail sales in earlier months were boosted by unusual factors such as big tax 
refunds, the World Cup and even an earlier Prime Day event at Amazon, according 
to Jennifer Timmerman, senior investment strategy analyst at Wells Fargo 
Investment Institute.

   U.S. consumers nevertheless appear to be getting more discouraged about the 
economy. A preliminary survey by the University of Michigan suggested sentiment 
among them is weakening by more than economists expected.

   The survey said drops occurred across the political spectrum and showed up 
particularly among older, lower-income and other groups who can be hurt most by 
inflation.

   On Wall Street, Reddit jumped 13% after learning its stock will join the S&P 
500 index on Tuesday. Many professional investors and funds closely track the 
index, either mimicking it or at least measuring their performance against it. 
That can push many investors to buy a stock automatically when it enters the 
index.

   Applied Materials fell 4.9% even though the company, whose technology helps 
make semiconductors, reported stronger profit and revenue for the latest 
quarter than analysts expected. CEO Gary Dickerson said global hunger for 
artificial-intelligence technology helped it deliver another record quarter.

   But its stock had already more than doubled this year and built expectations 
very high, which helped pressure the stock on Friday.

   AI stocks in general have been swinging sharply on worries that their prices 
shot too high because of AI euphoria and that their strong growth in revenue 
may not be sustainable.

   In the oil market, prices were relatively steady following big recent swings 
as hopes rose and fell about when the war with Iran will allow tankers to carry 
crude again from the Middle East again to customers worldwide. The price for a 
barrel of Brent crude rose 0.4% to $87.46 after drifting earlier between gains 
and losses.

   In the bond market, shorter-term Treasury yields eased following the retail 
sales report, suggesting traders see the Fed as less likely to hike interest 
rates at its next meeting in September.

   But the yield on the 10-year Treasury, which moves more on expectations for 
inflation and economic growth in upcoming years, rose to 4.66% from 4.63% late 
Thursday.

   In stock markets abroad, indexes were mixed in Europe and Asia.

   London's FTSE 100 slipped 0.1% after Nigel Farage regained the seat in 
Parliament he quit a month ago, beating trash-can wearing comic candidate Count 
Binface in a special election.

   South Korea's Kospi again had one of the world's sharpest moves and jumped 
2.4% for its third straight gain of at least that much. Seoul has been at the 
center of the world's swings for artificial-intelligence stocks because its 
market is dominated by two tech giants, Samsung Electronics and SK Hynix.