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Wall Street to Consumers: Please Shop Now! - Money Matters for 12/16/05
Once again, the great hope for a Christmas rally appeared in the morning, with Dow stocks up as much as 50 points in early trading, but faded throughout the day, with the most-widely watched index falling by just over 6 points at the close of trading.
Investors continue to pin hopes on a lively shopping season and continued growth in in the US economy, but, as time runs out on shoppers, Wall Street's patience seems to have hit a wall.
The Nasdaq and NYSE Composite also posted single-digit losses.
With less than 10 shopping days remaining before America's annual holiday splurge, Wall Street is now reflecting some doubt on the strength of holiday sales, which are tightly coupled to high gasoline and home heating fuel prices.
While crude, natural gas and home heating oil all fell in price today - especially light sweet crude, which dropped more than $2 to close at $59.05 - the one-day event did little to assuage consumer fears that are causing many to think twice before spending heavily on gifts, and that sentiment is weighing on retail stocks and Wall Street in general.
The anticipated transit strike in New York, which would have caused disruptions galore today, never materialized, though the deadline for negotiations expired at 12:01 a.m. Friday. Both sides are still at loggerheads, but the union has backed away from shutting down the rail and bus services in the city for now. New York's Taylor Law makes it illegal for municipal workers to strike, allowing for extensive fines to be imposed in the event of such strike.
As 2005 winds down, the waiting for a holiday rally has become ponderous and may well go unfulfilled. Stocks peaked late in November, so expecting a further rise, beyond 52-week highs, may be just a little bit too much to ask for this Christmas - even for the likes of Wall Street's greedy vultures.
Dow Jones: -6.08; 10,875.59 close
NYSE Advancers: 1587
Nasdaq Advancers: 1385
NYSE New Highs: 135
Nasdaq New Highs: 101
Gold: -0.70; 505.90 close
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