Stocks had a rough session on Friday as retail stocks sold off and the S&P 500 went deeper into the red for the year.
First, the scoreboard:
- Dow: 17,245.10, -202.97, (-1.16%)
- S&P 500: 2,023.06, -22.91, (-1.12%)
- Nasdaq: 4,927.88, -77.20, (-1.54%)
And now, Friday’s top stories:
- Retail stocks sold off after some more weak earnings. JC Penney shares dropped by as much as 16% after the retailer reported an earnings loss, although it was smaller than expected. Nordstrom continued to tank, and fell by as much as 16%, after results released on Thursday were worse than expected.
- Deutsche Bank analysts thought Nordstrom’s results were a sign of something fishy in the overall economy. “With a superior business model, in our view, that is half high-end dept. store, 30% off-price, and 20% online, this level of deceleration is a potential cautionary tale of the US consumer’s health,” they wrote in a client note.
- And then, retail sales whiffed. Headline sales rose 0.1% month-on-month in October, missing the forecast for 0.3%. Excluding auto and gas sales, core retail sales rose 0.4% during the month, matching the estimate. The September print was revised lower, to -0.4% from -0.3%. Sales were weighed down by a 0.9% drop in gas prices. The rest of the details were fairly good, as restaurant, sporting goods, and furniture sales all rose. Those aren’t things consumers spend on when they’re in “dire straits”, said BMO Capital Markets’ senior economist Jennifer Lee.
- In other economic data, producer prices unexpectedly fell 0.4%, and 0.3% excluding food and energy costs. BNP Paribas’ Laura Rosner wrote to clients that a drop in the prices of light motor trucks and margins for fuels and lubricants retailing were “unusual factors” that contributed to the unexpected decline.
- The University of Michigan’s preliminary consumer sentiment index for November was 93.1, higher than the forecast for 91.5. Consumer confidence was lifted by an upbeat outlook in the domestic economy. And, their inflation-adjusted income expectations were at the highest level since 2007. However, inflation expectations fell, to 2.5% for one-year ahead, and 2.5% — an all-time low — for five to ten years ahead.
- The US oil rig count rose for the first time in 11 weeks. Data from driller Baker Hughes showed that the count rose by two to 574, while the combined count of oil and gas rigs fell by four to 767.
- Crude oil fell 3% and came very close to $US40 per barrel for the first time in two and a half months. West Texas Intermediate crude oil futures dropped to as low as $US40.47 per barrel in New York. The International Energy Agency said in its monthly report that the supply glut was worsening, and demand is expected be weaker next year.
- Fitbit shares tanked 14% after the company offered up a sale of shares. In a regulatory filing on Friday, Fitbit said it was selling three million shares of common stock, down from seven million originally announced. It priced them at $US29 a piece, below Thursday’s closing price of $US31.68 per share. The stock priced at $US20 per share at the IPO in June, and is down 8% from then.
- Fossil shares collapsed 32% after the watchmaker reported a drop in sales. Macquarie analysts noted to clients that with inventories up 7% in the third quarter, and a forecast decline in fourth quarter sales, profit margins faced a tough future. They were “absolutely perplexed” by the results.
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