“Honey, this retail data is beauuuuutiful. Now let me try it on”
Dow: 13,172 (+0.02%) S&P 500: 1,404 (-0.01%)
Ach ja! Wall Street’s German-American constituency gleefully paraded onto trading floors this morning on news that the motherland was the lone Eurozone member whose Gross Domestic Product managed to grow in the 2nd quarter (just a .3% schluck though). The rest of the European Union, which is a bit smaller than the entire US economy, continues to shrink. This bad European situation was countered by an impressive report of American retail spending and solid earnings reports from luxury brands. A dearth of major market moving news today resulted in remarkably low activity (the lowest volume of trades since ’08). A few major downers like Groupon (reaching an all-time low) erased any optimism from the positive retail sales numbers and the Dow ended a smidge in the positive, up 3 points.
July Retail Sales jump for first time in 4 months
The highlight of today’s slew of econ data was the Commerce Department report that retail sales across the country climbed 0.8% in July – this number beat expectations, is the best pace since February and is the first increase in 4 months. The key take-away for investors was that consumer spending bounced back from department and electronics stores to car dealerships (have you seen the new Fiat? It’s awesome – we want one for inside MarketSnacks headquarters), easing concerns of the US economy slowing.
Low trading volume leads to sluggish market movements today
It’s that time of the year. Vacation season. While Martha’s Vineyard, the Hamptons, and the tolerable strips of The Jersey Shore are packed with Wall Street executives enjoying some time off, the floors of the New York Stock Exchange are empty on the usual batch of summer slowness. Even the indentured servants interns are gone. This week however is the quietest in years as vacation season combines with a quiet news week (scrutinizing Romney’s VP selection is not affecting the markets). On top of this, markets are so erratic these days that with the scary backdrop of a global slowdown, lots of investors have taken themselves out of the game, preferring to hold cash rather than risk their money in the markets. This led to yesterday having the lowest volume of shares traded on American stock exchanges since 2008 and today’s trading activity was comparably low.
Home Depot and luxury brands beat earnings, while Groupon falls hard
Home Depot (HD) led the way, adding nearly 4% on an impressive earnings report as the 2nd quarter earnings season that began in July slows this week. Luxury brands killed it today – Saks (SKS) booked a quarterly loss, but still beat expectations, Michael Kors (KORS) stock added 16.5% after earnings tripled over the last quarter and Estee Lauder (EL) leapt 25% as revenues rose in most regions. But for all the earnings fun, one big name couldn’t get in on the party. After yesterday’s market close, sexy growth stock Groupon (GRPN) announced that they topped earnings estimates, but revenues significantly missed forecasts. Investors are freaked about the latter, dropping the deal-site 26.75% today, because the value of Groupon merchandise bought by customers is falling like it was a fad…shares are so cheap now it’s like there’s an actual Groupon coupon out there for Groupon stock.
Tomorrow:
- Today’s retail-related econ reports were hefty – tomorrow’s thick with econ reports as well: July Consumer Price Index, July Industrial Production, August Empire State Survey…
- The 2nd quarter earnings season continues: Staples, Cisco, Target, Abercrombie & Fitch
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