Retail Sales, Dollar Drag U.S. Stocks Lower

123jump.com Staff
13 Mar, 2008
New York City

U.S. stocks pulled back at the opening after the release of retail sales, weekly unemployment and import and export prices. February retail sales declined 0.6% from a revised rise of 0.4% in January. Sales of furniture, auto and parts, and building materials declined the most. Import prices in February rose 0.2% from January and 13.6% from a year ago prompting inflation worries. European markets are trending lower and in Asia, Japan, China, and India fell sharply.

[R]10:00AM New York – U.S. stocks fell in the morning trading on a decline in retail sales, rise in import prices, and record lows in dollar.[/R]

U.S. stocks declined at the opening after February retail sales declined and import prices in the month rose. The economic data prompted worries that economy may be slowing down and food and energy prices along with prices of other products may be on the rise. The double whammy on the economy may add more strains in the economy that is widely believed to be rapidly slipping into a recession.

Dollar under fresh attack

U.S. stocks declined at the opening after dollar fell to a record low against euro and dropped below ¥100. Asian markets fell between 2% and 5% on the worries that the U.S. economic outlook is worsening and exports from the region are likely to fall.

The U.S. dollar dropped as low as ¥99.80 in Tokyo trading, a first decline below ¥100 since 1995. Dollar also reached parity with the Swiss franc at $1.0037 and traded above $2.0301 mark against the British pound.

The recent rise of yen against dollar of more than 6% in the last ten days has dragged Tokyo stocks to their lows of the year. Nikkei 225 index in Japan is now down 33% from its recent peak in October 2007 and is down 15% for the year.

U.S. retail sales declined in February

U.S. retail sales in February dropped 0.6% after rising revised 0.4% in January according to the Commerce Department. December retail sales decline 0.7%. February gasoline sales declined 1% after rising 2.3% in January. Sales of automobiles and parts declined 1.9% in February after rising 0.5% in January. Retail sales at all other retailers in the month declined 0.2% in February after rising 0.5% in January. February furniture stores sales declined 0.5%.

Export and Import prices in February rise

February import prices increased 0.2% after adding 1.6% in January and soared 13.6% from a year ago. The sharp rise compared to a year ago data sparked worries that the price inflation is broadening to more products and services and may keep consumer price index at elevated levels longer than the Fed’s projection. Import prices rose 0.6% in the month excluding petroleum products and were up 4.5% from a year ago.

The price indexes for consumer goods, automotive vehicles, and capital goods all ticked up in February, rising 0.3 percent, 0.2 percent, and 0.1 percent, respectively. The February increase in consumer prices was led by an advance in jewelry prices and came after a 0.5 percent rise in January. The increase for capital goods followed a 0.3 percent downturn the previous month.

The 0.9% increase in export prices in February followed a 1.2% advance in January which was the largest monthly rise for the index since January 1989. The index rose 6.8% for the year ended in February. The price indexes for agricultural exports and nonagricultural exports each contributed to the overall increase last month.

Agricultural prices rose 4.4% in February following a 5.0 percent increase the previous month and the index advanced 30.8% for the year ended in February, the largest 12-month rise since September 1988.

Higher prices for wheat, corn, and soybeans all factored into both the February and year-over-year increases. Nonagricultural prices increased 0.5% in February after rising 0.8% in January, and rose 4.6% over the past year.

European markets slide on new mortgage losses

European markets open sharply lower on the worries that additional mortgage defaults will likely hurt bank profits. Carlyle Capital Corp and its lenders failed to agree on its $17 billion loan refinancing terms. The 13-lenders are likely to seize all the remaining assets of the fund as it will not be able to meet its margin requirements of $97.5 million.

European banks and brokerage stocks dropped to a new low. UBS, Credit Suisse, Barclays, and HSBC Bank dropped to a new low for the year.

In London FTSE 100 Index traded lower 109.10 or 1.89% to 5,667.30, in Paris CAC 40 index decreased 114.40 or 2.44% to 4,582.70 and in Frankfurt DAX index declined 151.58 or 2.30% to 6,447.79. In Zurich trading SMI decreased 96.57 or 1.33% to at 7,148.47.

Asian markets trend lower

In Tokyo Nikkei 225 Index closed lower 427.69 or 3.33% to 12,433.44, in Hong Kong Hang Seng index decreased 1121.12 or 4.79% closed to 22,301.64. Australia ASX 200 index decreased 122.00 or 2.32% to close 5,135.90. In Malaysia KL Composite index decreased 31.24 or 2.53% closed to 1,201.35.

In South Korea Kospi Index decreased 43.21 or 2.60% to close at 1,615.62, in Thailand SET index closed lower 12.69 or 1.53% to 814.31 and Indonesia JSE Index edged decreased 115.65 or 4.52% to 2,440.59. Sensex index in India decreased 770.63 or 4.78% to 15,357.35.