U.S. Retail Sales Jump 4.5%; Stocks Drift Down 1.3%

Bikram Pandey
28 Dec, 2011
New York City

U.S. indexes halted a rally of five days after financials and resources linked stocks led the decline of more than 1%. The euro dropped to a 10-year low against the yen ahead of the last auction of Italian bonds tomorrow as yields perked up to 7% level.

[R]4:00 PM New York – U.S. indexes halted a rally of five days after financials and resources linked stocks led the decline of more than 1%. The euro dropped to a 10-year low against the yen ahead of the last auction of Italian bonds tomorrow as yields perked up to 7% level. U.S. holiday retail sales increase may not lead to an increase in profits at retailers.[/R]

The U.S. indexes declined more than 1% after the euro dropped to a 10-year low and retailers sold more but at the expense of profit margins.

U.S. retailers’ sales at malls in the last week increased 4.5% from a year ago as shoppers took advantage of the last minute bargains. Sales in the week ending December 24 increased 0.9% from the previous according to an index tracked by International Council of Shopping Centers. Sales at the previous week increased 3.4% from a year ago.

Chain stores sales are expected to rise in December month and in the holiday period but profit margins at large chains are expected to shrink. The ICSC reaffirmed its December same store sales estimate between 3.5% and 4% and the National Retail Federation estimated sales increased of 3.8% in the holiday season compared to 5.2% in the period a year ago.

Morgan Stanley said it plans to cut 580 jobs in New York City. New York Times agreed to sell its Regional Media Group to Halifax Media Holdings for $143 million.

Across the Atlantic, European markets edged higher after Italy successfully auctioned €9 billion of six-month bills at a sharply short term lower yield today. Greece postponed general elections to April. Spanish mortgage lending decreased in October but Swedish retail sales increased in November.

The UK indexes climbed in thin trading and a private think tank estimated UK jobless rate to rise to 8.8% in 2012. Thomas Cook slumped 3.3%. UK retail sales in the holiday period to Boxing Day are estimated to increase at least 4%. Boxing Day sales are estimated flat.

Stocks in Japan edged lower and trading volume hovered near the lows last seen seven years ago. Tepco dropped 12% today after a minister urged the company to temporarily relinquish the control to access government aid. J. Front Retailing lifted annual earnings estimate.

Australian stocks declined and the benchmark index fell 1.3% and retail sales in the holiday period were estimated to be flat or declined slightly. Australia approved the sale of Murchison Metals stake in Western Australia port and rail project to Mitsubishi.

Commodities, Bonds and Currencies

The yield on 10-year U.S. bond decreased to 1.9% and 30-year bond inched down to 2.9%.

The U.S. dollar edged up 1% to $1.294 to one euro and traded lower against the Japanese yen to 77.90.

Immediate delivery futures of Texas crude oil decreased $1.80 to $99.54 a barrel and futures of natural gas fell 2 cent to $3.08 per mbtu and gasoline price fell 3.9 cents to 264.95 cents a gallon.

In metals trading, copper decreased 4.6 cents to $3.36 per pound, gold decreased $37.80 to $1,557.70 per ounce and silver decreased $1.60 to $27.11.