Stocks fall after unexpected drop in retail sales
June 11, 2010 The Commerce Department said retail sales fell 1.2 percent in
May. It was the first drop in sales in eight months and was well
short of forecasts. Economists polled by Thomson Reuters had
predicted the pace of growth would slow between April and May, but
still rise 0.4 percent. The drop in sales was widespread.
The disappointing report comes a day after stocks surged on
upbeat global economic data. The back-and-forth movements fit into
the trend of extreme volatility that has been seen in recent weeks.
The Dow Jones industrial average has had only one two-day winning
streak since late April, and that included a day where it rose just
6 points. That's a sign of uncertainty among traders.
The Dow fell nearly 73 points early Friday. It climbed 279
points Thursday after reports showed the global economy is healing,
despite persistent worries that Europe's sovereign debt crisis
would curtail any recovery.
The retail sales report marks the second straight Friday that
futures retreated after weak domestic economic news. Investors were
looking for the sales data to provide reassurances about the
nation's health a week after a disappointing employment report
casted doubt about momentum in the economy.
In early morning trading, the Dow fell 72.55, or 0.7 percent, to
10,099.98. The Standard & Poor's 500 index fell 8.29, or 0.8
percent, to 1,078.55, while the Nasdaq composite index fell 13.47,
or 0.6 percent, to 2,205.24.
Reports on consumer sentiment and business inventories due out
later Friday could provide some relief after the sales report.
The Commerce Department is expected to say business inventories
rose 0.5 percent in April after climbing 0.4 percent in March.
Inventories usually only jump when businesses become more confident
that consumers will return to stores.
Consumer spending is vital to a sustained recovery because it is
the primary driver of economic activity.
Economists also predict sentiment among consumers is growing,
even though unemployment remains high. A preliminary reading of the
Reuters/University of Michigan consumer sentiment index for May
likely rose to 74.5 from 73.6.