U.S. Stocks Weak On Softer Retail Sales, Import Prices Rise

Nichole Harper
14 Feb, 2012
New York City

U.S. stocks traded lower and declined from the high of seven-month after retail sales were softer than expected. The broader indexes have jumped more than 25% in the rally that began in October. Banks were among the leading decliners.

[R]12:00 PM New York – U.S. stocks traded lower and declined from the high of seven-month after retail sales were softer than expected. The broader indexes have jumped more than 25% in the rally that began in October. Banks were among the leading decliners.[/R]

U.S. indexes declined from a seven-month high after retail sales were softer than anticipated in January and import prices rose more than expected. Market sentiment also faced headwind on renewed worries in the euro zone but bond yields fell.

Retail sales in January increased 0.4% and sales excluding autos, fuel and building materials rebounded 0.7% after declining 0.4% in December, according to a latest release from the Commerce Department.

The retail sales report also showed that spending at gasoline stations increased 1.4% and at electronics stores increased 0.5%. However, sales of automobiles and auto parts declined 1.1% in the month and surprised economists after auto sales were at a 30-month high.

In a separate report, the department also noted that business inventories rose 0.4% to $1.56 trillion in December. And another report from Labor Department showed import prices increased more than expected in January after crude oil and food prices rebounded.

European Markets Rebound as Yields Fall

European markets traded higher and reversed early trading decline on stronger than expected bond auction from Italy and Spain and German economic sentiment improved in January. Sovereign yields across the region were on the decline.

Indexes in the region declined after Moody’s lowered it credit view on Italy, Spain, Portugal, Slovenia, Slovakia and Malta. The credit opinion firm also said that France and UK could lose its highest rating as governments face pressure on rising expenses.

Italy completed the sale of €6 billion of bonds maturing in November 2014 and yields on bonds declined to the lowest since the last auction in March 2011. With the latest auction, Italy completed €34.5 billion of €90 billion debt roll over it needs to complete before the end of April.

Stock Movers

Avon Products, Inc. ((AVP)) increased 3.4% or 60 cents to $18.13 after the personal care products maker reported fourth quarter total revenue fell 4% to $3.04 billion from $3.17 million in the same quarter last year. Net loss in the quarter was $0.4 million compared to net income of $229.5 million or 53 cents per diluted share in the year ago earlier.

L’Oreal increased 3.6% to €84.59 after the company said operating earnings in 2011 increased 7.7% to €3.29 billion and reiterated outlook for 2012. Emerging markets recorded 10.6% growth in sales and Asia Pacific sales increased 13%.

The company also said that L’Oreal heiress Lilliane Bettencourt, 89, resigned from the company board and replaced by her 25-year old grandson. Bettencourt controls 30% stake in the company valued at €49 billion.

Goodyear Tire & Rubber plunged more than 8% after it reported fourth quarter revenues of $5.68 billion, a tad below market expectations.

Omnicom Group Inc. ((OMC)) fell 31 cents to $47.71 after the advertising holding company reported fourth quarter revenue grew 7.4% to $3.85 billion from $3.59 billion in the same quarter last year. Net income in the quarter increased 10% to $271.9 million or 96 cents per diluted share compared to $246.5 million or 83 cents per diluted share in the year ago period.

Rackspace Hosting, Inc. ((RAX)) increased 9.1% or $4.48 to $53.71 after the cloud hosting services provider reported fourth quarter net revenue soared 32% to $283.3 million from $214.7 million in the same quarter last year. Net income in the quarter surged 85% to $25 million or 18 cents per diluted share compared to $13.5 million or 10 cents per diluted share in the year ago earlier.