Weak U.S. Retail Sales in November; Best Buy Plunges 12%

Nichole Harper
13 Dec, 2011
New York City

U.S. stocks traded sideways ahead of the Fed statement this afternoon and retail sales in November rose at the slowest month since June. Best Buy dropped 12% after the electronics retailer reported weaker sales and 29% fall in earnings.

[R]11:30 AM New York – U.S. stocks traded sideways ahead of the Fed statement this afternoon and retail sales in November rose at the slowest month since June. Best Buy dropped 12% after the electronics retailer reported weaker sales and 29% fall in earnings.[/R]

U.S. indexes opened higher and lost most of the early gains in the third hour trading as retail sales in November rose at the slowest pace since June.

Retail sales increased 0.2% in November after rising revised 0.6% in October according to the latest data released by the Commerce Department. October retail sales were previously estimated at 0.5% increase.

The monthly sales increase was the smallest increase since June as unemployment hovers above 8.5% and wages stagnate.

Auto sales in the month increased 0.5% and the demand at building material stores decreased 0.3% and sales at clothing stores increased 0.5%. Sales at electronics and appliance stores increased 2.1%.

Several mechanisms to contain the government spending in most nations in the euro zone become effective today but automatic sanctions in the new intergovernmental treaty are still not finalized.

Investors are awaiting the Fed statement this afternoon 2:15 p.m. Eastern Time after a two day meeting that will review the economy and the health of the job market and inflationary pressures.

The latest survey of investor sentiment in Germany showed an increase but market outlook remained gloomy. The ZEW index increased to -53.8 in December from -55.2 in November.

In Paris trading CAC 40 Index eased 1.04 to 3,088.55 and DAX 30 Index rose 0.6% or 35.34 to 5,820.77. The euro traded near $1.32 and the ECB said the demand for short term loans at its recently opened dollar window was close to €300 billion, the high in 30 months.

In other markets in the Europe, the benchmark index in Spain fell 0.2%, in Italy added 0.7%, in Greece soared 1.9% and in Switzerland was flat.

Greece said its budget gap widened 5.1% to €20.52 billion in eleven months to November from a year ago as construction dropped 38% in the year to August.

The deficit in the current year is expected to increase to 10%, higher than the target by the central bank of 9% and the economy is expected to shrink by 5.5%. Greece is expected to enter into a recession for the fifth year in a row next year and budget deficit in 2012 is estimated to narrow to 9%.

Stock Movers

Best Buy ((BBY)) dropped 12% or $3.34 to $24.73 after third quarter profit fell 29% to $154 million or 42 cents a share compared to $217 million or 54 cents a share.

Revenues in the quarter increased 1.8% to $12.1 billion and comparable same store sales in the quarter increased 0.3%.

Morgan Stanley ((MS)) increased 31 cents to $15.69 and the financial services company and MBIA Inc agreed to withdraw mutual law suits related to credit default swaps sold by MBIA. The agreement will result in a net payment to Morgan Stanley and the financial services company will also take a pre-tax charge of $1.8 billion or $1.2 billion after tax.

FactSet Research Systems Inc ((FDS)) declined $3.75 to $91 after the financial data reseller said fiscal first quarter net income increased 9.5% to $45.5 million or 99 cents from $41.6 million or 88 cents a share in the quarter a year ago.

Revenues in the quarter increased 13% to $196.4 million from $173.3 million in the quarter a year ago.