The grinch hits retailer stocks, paces midday decline
Small-cap stocks extended the morning decline into midday trading, with retailer stocks leading the way down. Additional pressure came from sinking energy stocks, a weak tone in some commodity names, tumbling automakers and modest declines in financial shares as well. At 12:31 p.m. ET, the Russell 2000 (NYSE:IWM) was down 15.82, or 3.25%, at 470.44.
Last weekend was supposed to serve up one final heroic shopping push into the Christmas holiday, but awful weather in several key markets around the country didn’t exactly help save the day. Analysts at DA Davidson today said that this shopping season could be the poorest in some 25 years, since the recession back in the early 1980s. The S&P Retail Index was off some 4% at mid-session.
Crude oil prices resumed the downward path after showing some upside potential earlier this morning. Crude oil was off more than 3%, slipping back below $41 a barrel as Chinese imports tumbled to the lowest level of the year in November. Energy stocks were off about 2.5%.
Automakers were finding out that the glow from Friday’s $13.4 billion dollar White House bailout had a short shelf-life among investors. General Motors Corp. (NYSE:GM) was down 16% at midday, while Ford Motor Co. (NYSE:F) was off 11%. Credit Suisse analysts lowered its rating on GM to “underperform” and cut their price target to $1, saying that GM’s credit could be entirely wiped out if it complies with restructuring mandates in the bailout fine print.
Restaurants were a hot item on Friday, but were a little cool this morning, perhaps tied to profit-taking and also from the ongoing worries about the economy. Among small-cap movers, eatery chain Lubys Inc. (NYSE:LUB) was down 17%. Other small caps on the decline included Jones Apparel Group Inc. (NYSE:JNY) off 15% and Browne & Co. Inc. (NYSE:BNE), down 15% as the marketing communications firm gave back a huge chunk of Friday’s rally. Oxford Industries Inc. (NYSE:OXM) was down 14% as the apparel maker turned south along with other apparel and retail names after a strong performance last week. On the upside, MAP Pharmaceuticals Inc. (Nadsaq:MAPP) remains a popular small-cap share on the rise after a huge rally Friday on news that the firm will join with AstraZeneca (NYSE:AZN) to develop and market a pediatric asthma drug.
The chart picture turned decidedly bearish as the market slipped through the first support line at 473. There is very little convincing support now until the market gets closer to 461. The hard slide off last week’s test of key resistance at 491 sets up a bearish rollover, and until 491 is taken out with conviction it will be difficult to embrace upside potential for the Russell.
