- The Dow and S&P posted weekly losses for the first time in three weeks after retail stocks took a beating.
- The SPDR S&P Retail ETF (XRT) fell 1.8 percent Friday after J.C. Penney posted quarterly results.
U.S. equities closed mostly lower on Friday as investors digested a tough week for retailers as well as mixed economic data.
The Dow Jones industrial average fell about 23 points, with Goldman Sachs and UnitedHealth contributing the most losses. General Electric was the biggest laggard in the 30-stock index after Deutsche Bank downgraded the stock to sell from hold. The Dow also snapped a three-week winning streak.
The S&P 500 dropped 0.15 percent, with industrials lagging, and snapped a three-week winning streak. The SPDR S&P Retail ETF (XRT) fell 1.8 percent.
The fall in retailers came after J.C. Penney's stock dropped 14 percent in afternoon trade. The company reported mixed quarterly results, with earnings topping expectations but same-stores sales fell more than expected.
"What this means for investors is tread softly. Just because a stock is low in price, it doesn't mean it's cheap. Our friends at J.C. Penney have shown us that," said Kim Forrest, senior equity analyst at Fort Pitt Capital.
Several retailers, including Macy's and Nordstrom, have seen their stocks tank this week after reporting weaker-than-expected quarterly results, putting the sector under pressure.
SPDR S&P Retail ETF (XRT) this week
Investors kept a close eye on the retail space as they assessed the strength of the U.S. consumer, a key component of the U.S. economy.
In economic news, the Commerce Department said retail sales increased 0.4 percent in April from March, less than expected.
Meanwhile, consumer prices rose 0.2 percent in April, in line with expectations. In the 12 months through April, the CPI increased 2.2 percent.
While that was a slowdown from March's 2.4 percent increase, the year-on-year gain in the CPI was still larger than the 1.7 percent average annual increase over the past 10 years.
"The package of economic data we got had mixed tone to it," said Bill Northey, chief investment officer at the Private Client Group at U.S. Bank. "I think it underscores how weak the first quarter was."
Treasury yields fell on the back of the data. The benchmark 10-year note yield slipped to trade near 2.32 percent, while the two-year note yield hovered near 1.29 percent.
"Last month we got a pretty weak CPI number and here we have more of the same," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott. "The [slowdown] in consumer inflation should raise a yellow flag for the Fed."
The Federal Reserve raised interest rates in March and many investors are expecting the central bank to hike twice more, including next month. Market expectations for a June rate hike were 73.8 percent, according to the CME Group's FedWatch tool.
Equities have traded in a narrow range this week, with the S&P and Dow slight weekly losses and the Nasdaq composite ending the week slightly higher. The S&P and Nasdaq also eked out record levels earlier this week as volatility reached its lowest levels since 1993 on a closing basis.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded closed below 10 earlier this week, raising concerns about complacency in the market. Equities posted just a muted reaction to news that President Donald Trump had fired James Comey from his post as FBI director and have avoided major losses from retail's weakness.
"This has been a pretty quiet market," said U.S. Bank's Northey. "This is a market that has shown a lot of resiliency, but some might call that complacency."
The Dow Jones industrial average fell 22.81 points, or 0.11 percent, to close at 20,889.61, with General Electric and Apple the top advancer.
The dropped 3.54 points, or 0.15 percent, to end at 2,390.90, with industrials leading nine sectors lower and utilities and information technology as the only advancers.
The Nasdaq rose 5.27 points, or 0.09 percent, to close at 6,121.23.
About four stocks declined for every three advancers at the New York Stock Exchange, with an exchange volume of 776.47 million and a composite volume of 3.289 billion at the close.
—Reuters contributed to this report.
On tap this week:
Earnings: Allianz, ArcelorMittal, JCPenney, Acushnet
10:00 a.m. Consumer sentiment
10:00 a.m. Business inventories
12:30 p.m. Philadelphia Fed President Patrick Harker