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NYSE Rolls Over As Holiday Shopping Weighs - Money Matters for 12/15/05
With the Christmas (or holiday, for the PC crowd) shopping season winding down and evidence beginning to brim up that shoppers are not only waiting until the last minute, but many may have already tapped out their gift-buying budgets, the NYSE quietly, almost without notice, rolled over, as the headline indices, the Dow, Nasdaq and S&P 500 posted single-digit losses.
The 36-point slide on the NYSE was marked by the ominous turn of the new highs - new lows reading turning negative for the first time in over a month. Attending the decline on the Big Board was a continuance of slippage in the advance-decline line, with losers outweighing gainers by a 5-3 margin. The A-D line on the Nasdaq was similar, with nearly 3 losers for every 2 winners.
Trading was very orderly and constrained, as it has been most of the month, with investors looking for signs of change from the worn-out status quo. The Nasdaq, for instance, has traded in a narrow 40-point range since November 21 and sit close to 4 1/2 year highs, though the rally has stalled for nearly three weeks and seeks some kind of catalyst to move higher.
The kick-start could be supplied by retail sales from the usually buoyant big box Christmas retailers like JC Penny, Sears, Target and Wal-Mart, but the sweet sound of wildly ringing cash registers has yet to develop. There's a feeling that with high gasoline prices and the very real threat of double-digit percentage increases in the cost of home heating (as high as 40-75% higher prices have been predicted), things are different this year. More and more people are reigning in holiday spending to better cope with normal household costs.
An article which appeared this morning on CNN/Money, "Where have all the shoppers gone?" offers some of the best insight we've yet to see from the unusually quiet retailers.
Marshal Cohen, an analyst with the NPD Group, noted, "I've been doing this for a long time. Other than in 2001, I haven't seen such a lackluster tone during the holidays."
He added, "If I can find a parking space in the first or second row of a major mall this close to Christmas, something's wrong."
Is Mr. Cohen on to something or have consumers become super-savvy about holiday mark-downs, waiting until the last minute for the retailers to slash prices?
Some of the fall-off for the retailers surely has something to do with the rise of internet shopping, which has been reporting brisk activity and healthy gains across the spectrum.
An article in the New York Times, titled, Shopping Crowds Seem Lighter at the Mall This Year noted that mall traffic was being hurt by both the internet and discount retailers, notably Wal-Mart.
"For December so far, customer traffic has fallen 3.3 percent and sales have dropped 9 percent, compared with 2004, according to ShopperTrak, a market research firm that monitors activity in thousands of mall-based stores," the article stated.
With the coming weekend crucial, retailers will wait until after this weekend to begin any major discounting. Nearly 60% of all Christmas shopping is expected to be completed by Sunday, leaving a scant 6 shopping days left, including Christmas Eve, when stores will close early - usually by 6:00 p.m. This year, Christmas Eve happens to fall on a Saturday, making life a little bit easier for last-minute shoppers.
What all of this will indicate for the stock market, in a very anecdotal kind of way, is a folksy way of gauging the overall health of the US economy. If people are unwilling or otherwise unable to spend heartily on gifts, it spells trouble for the economy, as consumers account for more than 70% of the GDP. A sluggish Christmas season will be extremely damaging to the retail sector as well.
With the roll over of the NYSE in clear view today, plus the wild card of a possible transit strike in New York (which is set begin tonight at 12:01 a.m. unless the union and the MTA can come to terms), prospects for stocks and the widely-anticipated Santa rally are beginning to fizzle.
Dow Jones: -1.84; 10,881.67 close
NYSE Advancers: 1230
Nasdaq Advancers: 1182
NYSE New Highs: 93
Nasdaq New Highs: 86
Gold: -2.90; 506.60 close
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