“Retail spending is soooo out this season”
Dow 12,727 (-0.39%) S&P 1,354 (-0.07%)
We keep the “Welcome Jar” here at MarketSnacks Headquarters stacked with enough candy to rival a trick-or-treater’s stash. So when stocks dropped today after rallying 204 points on Friday, it immediately reminded us of that post-sugar rush headache. A poor report on US retail sales hurt consumer-oriented stocks and a negative econ forecast from the International Monetary Fund kept them in the red. Citibank (C) advanced on slightly better-than-expected earnings (but, like JPM last week, still down compared to last year) and an index on manufacturing activity in New York State edged up, but the Dow fell 50 points for its 7th loss in 8 trading sessions.
IMF expresses global economic concerns in report, drops 2013 forecast
The International Monetary Fund released a grim forecast for its mid-year check-up on the world economy. The international economic organization lends to the world’s nations when they ask politely and provides analysis of global finances from its broad perspective – today it also dropped its global growth projection from 4.1% to 3.9% for 2013, but did keep its 2012 forecast at 3.5%. The report’s focus was on central bank activities, and the IMF acknowledged that China’s, the Eurozone‘s and Great Britain’s have all taken accommodative measures to help along their respective economies – the Fed has yet to enact a new stimulus plan, but appears ready to do so. The highlight though was the observation that emerging markets (like the BRICs) that were bright spots in the last IMF report are now being dragged down by Europe because of the continent’s eroding buying power.
Retail sales fall for a third straight month
Since the American gross domestic product is about 70% consumer spending, investors were bummed to see that retail sales fell for a 3rd straight month. Retail spending is just about an American pastime – we go to the mall, wander down aisles and fill our shopping carts with little-needed, but much-wanted goods. June’s retail spending dropped 0.5% from May and was lower than all of the 81 analysts polled by Bloomberg. Retail spending is closely correlated to the employment market, and three straight months of weak job growth is hurting consumer confidence. Macys (M), Target (TGT) and Home Depot (HD) dropped on this news.
Tomorrow:
- The big theme this week is going to be major corporate earnings announcements as the corporate earnings season enters its 2nd week (Coca-Cola, Goldman Sachs, Johnson & Johnson…)
- Yahoo! (YHOO) CEO musical chairs – the has-been internet search engine hired current Google (GOOG) Executive Melissa Mayer as the 4th CEO in 5 years. Mayer is an early Googler responsible for its pristine, unadorned search page as well as for developing the images and video search functions. Investors likey – YHOO shares were up over 2% in after-market trading (they also report earnings tomorrow)
- NAHB Housing Market Index for 1st half of July
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