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Down to the Wire for Retailers, Stocks - Money Matters for 12/19/05
With less than seven shopping days remaining before Christmas and less than ten trading days left in 2005, the clock began to click in earnest for the nation's retailers and US equities.
Sensing just a touch of panic in the air, investors prompted the indices to their worst performance of December, not necessarily in points, but in breadth of trade. The Nasdaq took the brunt of the punishment, sliding nearly thirty points as advancers were dwarfed by declining issues by more than a 2-1 margin. Likewise, the NYSE saw the A-D line solidly in the red, as the margin of losers to winners approached 3-1.
Ironically, oil futures traded lower but failed to instill any confidence in stocks. Crude dropped by a dollar, pushing the cost of a barrel for February delivery to nearly $58.
While the general market was off less than 1/2%, department stores were singled out for special treatment following discouraging trends from the final weekend before Christmas. Saks, Inc. (SKS) led the way lower, losing nearly 6% on the day. Retail Ventures (RVI), which operates DSW, Value City and Filene's discount stores, slid 0.45 points, a 3.5% decline. The Bon-Ton Stores (BONT), which are offering discounts of 40-60% on general merchandise this week, lost 3.34%. JC Penny's, Sears, Dillard's and Federated department stores also recorded losses.
The S & P Retail index ($RLX) closed down 6.24, a 1.34% loss, an ominous sign during what should be the height of the holiday shopping season. Retailers face a double-edged sword this season, as consumers are hard-pressed to find extra discretionary dollars to spend and retailers risk losing margins by discounting heavily.
Retailers were less-than-overjoyed at the weekend's activity. Mall traffic appeared to be generally good, but not overpowering, in a trend that continued to defy expectations. There are hints here and there that retailers - though loathe to panic - are ready to throw in the towel on the 2005 shopping season. Talk of internet sales, procrastination (last minute shopping) and post-holiday gift card redemption is beginning to be heard more than in just passing, indicating that the hope-for holiday rush is a pipe dream going up in smoke.
Judging by what occurred on Wall Street today, the realists (this analyst included), who have been warning not to be too hopeful for holiday shopping, appear to have had it right all along.
Dow Jones: -39.06; 10,836.53 close
NYSE Advancers: 943
Nasdaq Advancers: 958
NYSE New Highs: 70
Nasdaq New Highs: 93
Gold: +0.20; 506.10 close
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