U.S. stocks were set to open flat on Thursday, as a sharp drop in retail sales in December overshadowed optimism over a breakthrough in the U.S.-China trade talks.
Retail sales tumbled 1.2 percent in the last month of 2018, the commerce department said, the largest decline since September 2009 when the economy was emerging from recession. Economists polled by Reuters had forecast retail sales increasing 0.2 percent.
Retailer Target Corp’s shares dipped over 1 percent in premarket trading, while department store operators Macy’s Inc and Nordstrom Inc shed more than 0.5 percent.
“The numbers were a bit of a surprise on the downside and that is critical because this is for December and it suggests that people weren’t spending enough on holiday sales shopping,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
Futures gained earlier, as the U.S.-China trade talks entered a higher level. Sentiment was also boosted after President Donald Trump said the negotiations were “going along very well”, and Bloomberg said Trump was considering pushing back the March 1 deadline for higher tariffs on Chinese goods by 60 days.
“It’s continued optimism over the U.S.-China trade negotiations because the administration continues to hint that progress is being made,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.
The S&P 500 index and the Nasdaq have ended higher since the latest round of talks started on Monday in Beijing, with the benchmark index closing above its 200-day moving average for the second straight day on Wednesday.
Easing tensions between the world’s two largest economies also lifted crude prices, with oil majors Exxon Mobil Corp and Chevron Corp rising about 1 percent.
Meanwhile, the Congress is looking to end a dispute over border security on Thursday with legislation that would ignore Trump’s request for funds to help build a U.S.-Mexico border wall.