Retail sales lower stocks
The Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) are sagging following news of disappointing August retail sales.
At 10:35 a.m. ET, the small-cap index had retreated 2.96 points, or 0.38%, to 777.39. The Dow let go 5.04 points, or 0.04%, to 13,419.84.
Retail sales posted a smaller-than-expected increase of 0.3% to $377.6 billion in August from $376.57 billion in July, the U.S. Census Bureau reported before the opening bell.
The increase was below the projected rise of 0.4% and was largely attributed to strong automobile sales. Excluding sales of motor vehicles and automotive parts, retail sales tumbled 0.4% to $300.49 billion, compared with $301.56 billion in the previous month. Economists were forecasting that sales, excluding cars and parts, were projected to add 0.2%.
Taking a closer look at the numbers, sales of electronics and furniture increased, while sales of building materials and sales at food and beverage stores fell.
The data suggests that the American consumer is growing tired as a result of an ongoing slump in the U.S. housing sector and the recent financial turmoil. That’s bad news that could put the brakes on economic growth, due to consumption accounting for about 70% of gross domestic product.
But the University of Michigan’s monthly index of consumer sentiment shows that Americans are willing to make purchases, even if they spent less in August than economists projected.
The index rose to a reading of 83.8 in September, from a downwardly revised level of 83.4 in August, the University of Michigan announced after the opening bell. Observers were calling for a more modest rise to 83.5. The index measures the willingness of Americans to spend money.
Stocks responded by trimming their early losses, but remained below the flat line.
In other economic news, the U.S. Labor Department announced before the opening bell that the price of goods imported into the United States unexpectedly fell 0.3% in August, marking the first decline since January. The decline was a sign that cheap imports cannot be counted on to consistently ease inflation pressures.
