U.S. stocks closed narrowly mixed on Wednesday as investors remained wary of climbing bond yields and the lack of indications for a strong second-quarter rebound in the economy. (Tweet This)
"The bond market is driving the bus here," said Peter Boockvar, chief market analyst at The Lindsey Group. "This was another disappointing retail sales number."
Yields crept towards 6-month highs touched on Tuesday morning. Gains and losses in equities were muted, with the Dow Jones industrial average and S&P 500 ending mildly lower after fluctuating around the flatline throughout the day. The Nasdaq held a few points higher as Apple, Microsoft and other tech stocks gained.
It's "helpful you haven't had further rout in fixed-income markets," said Ben Pace, chief investment officer at HPM Partners. "The retail sales number wasn't that good that it will speed up the Fed in any way."
Retail sales data for April was flat, with the ex-autos figure up just 0.1 percent, below estimates of a 0.5 percent gain. Expectations were for the data to show modest growth, partly due to the warmer weather.
"I think it really was disappointing," said Paul Nolte, portfolio manager at Kingsview Asset Management. "We could have rallied a lot more."
Following the retail sales data, JPMorgan lowered its expectations for second-quarter real annualized GDP growth to 2.0 percent from 2.5 percent.
"That second-quarter may not be as much of a bounce back from the first quarter," Boockvar said.
However, most analysts remain confident that growth will pick up in the third and fourth quarter.
Encouragingly, the U.S. dollar continued to weaken, declining 1 percent on Wednesday while the euro topped $1.13. Corporate profits in the first quarter were hit from rapid strengthening in the U.S. dollar.
Gold ended up $25.80 at $1,218.20 an ounce, its highest settle since April 6.
Meanwhile, the late afternoon recovery in bond yields weighed slightly on equities.
"I think we look through (retail sales) and look at the bond market," said Art Hogan, chief market strategist at Wunderlich Securities. He noted that the upward revision on March's retail sales balanced out softness in the April report.