Weakest U.S. Consumer Spending in Five Years, World Markets Lack Direction

Nichole Harper
02 Feb, 2015
New York City

U.S. stocks traded sideways and the latest economic data suggested consumers are using the benefits from cheaper energy to pay down debt and save more.

[R]1:45 PM New York – U.S. stocks traded sideways and the latest economic data suggested consumers are using the benefits from cheaper energy to pay down debt and save more.[/R]

Stocks traded sideways in New York after the release of consumer spending and real disposable income and construction data.

U.S. consumer spending declined the most in December after adjusting for inflation and households appear to use the extra cash from cheaper gasoline to pay down debt and savings.

On Wall Street trading, Tollbooth Strategy Index increased 0.2% or 16.74 to 9,989.80.

S&P 500 index rose 5.64 or 0.3% to 2,000.72 and the Nasdaq Composite Index edged up 1.06 or 0.02% to 4,635.55.

December personal income rose 0.3% and disposable personal income increased 0.3%. Personal consumption expenditure fell 0.3% in the month, Department of Commerce reported today.

In a separate report the department said construction spending in December jumped 0.4% at annual rate of $982.1 billion from the revised November estimate of $978.6 billion and jumped 2.2% from a year ago spending of $961.2 billion.

U.S. Movers

Exxon Mobil Corporation ((XOM)) gained 1.4% or $1.20 to $88.60 after the energy explorer and distributor reported total revenues in the fourth-quarter ending in December declined 21.3% to $87.3 billion a year ago period.

Net income in the quarter plunged 21.3% to $6.57 billion or $1.56 a diluted share compared to $8.35 billion or $1.91 from the same quarter last year.

Sysco Corporation ((SYY)) slipped 1.6% or 64 cents or $38.53 after the foodservice provider reported sales in the second-quarter ending on December 27 jumped 7.6% to $12.1 billion a year ago period.

Net income in the quarter tumbled 25.1% to $158 million or 27 cents a diluted share compared to $210.8 billion or 36 cents from the same quarter last year.

European Markets

In London trading, FTSE 100 index slid 0.1% or 7.58 to 6,741.82 and in Frankfurt the DAX index rose 0.1% or 17.93 to 10,712.25.

In Paris, CAC 40 index fell 0.1% or 6.62 to 4,597.63.

CRH Plc soared 5.6% to 1,692 pence after the Ireland-based building material provider agreed to acquire assets from cement maker Holcim Ltd. and Lafarge SA worth about €6.5 billion or $7.34 billion.

Ryanair Holdings plc plunged 3.8% to 10.1 pence after the Ireland-based airline company reported revenues in the third-quarter ending in December climbed 17% to €1.1 billion from €964 million a year ago period.

Net in the quarter swung to profit from a year ago to €49 million compared to a loss of €35 million and diluted earnings per share swung to 3.53 pence from a loss of 2.50 pence per share.

The airline lifted net profit forecast for the year for the fifth time in the range of €840 million to € 850 million.

Asian Markets

Tokyo indexes declined after weaker than expected economic growth in the U.S. and China reported manufacturing index shrank in December.

Chubu Electric Power lowered its net income outlook by 26%. Fujitsu soared after the conglomerate lifted its outlook by 5.6%.Lixil Group lowered its sales outlook.

Stocks in Tokyo traded lower following weaker than expected economic data from the U.S. and China.

U.S. economic growth in the December quarter was less than expected 2.6% annual rate and for all of 2014 rate was 2.4%.

Separately, China reported manufacturing activities in December shrank for the first time in more than two years. A private report published by HSBC and Markit Economics also was lower than expected.

The Nikkei 225 Stock Average dropped 116.35 or 0.7% to 17,558.04 and the broader Topix index fell 6.32 to 1,408.75.

The yen closed lowered at 117.58 against one dollar.

Stocks in Mumbai were on the defensive after automakers reported mixed results.

Maruti Suzuki said total vehicle sales surged 13.7% in January from a year ago month and domestic sales increased 8.7% to 116,000.

Tata Motor said commercial and passenger vehicles sales jumped 5% to 42,582 from a year ago month. Passenger car sales soared 19% to 13,047 and commercial vehicle sales were unchanged at 25,574.

The second largest commercial vehicles maker, Ashok Leyland sales in January rose 36% to 10,639 and Mahindra & Mahindra said utility vehicle sales declined 6% to 39,930 units.

The Sensex Index fell 60.68 to close at 29,122.27. The CNX Nifty slid 11.50 to 8,787.40.

Indian rupee closed at 61.84 against one dollar.