Wall Street’s downslide continued into Friday amid a selloff in retail stocks, capping the worst week for the major averages since August.
The Dow Jones Industrial Average was 202 points lower, or 1.16% to 17245. The S&P 500 shed 22 points, or 1.12% to 2023, while the Nasdaq Composite declined 77 points, or 1.54% to 4927.
The consumer discretionary sector was the worst performer on the session after weak quarterly results from major retailers who said consumers just weren’t buying apparel in the third quarter. Materials represented the lone sector to post a gain.
After a relatively quiet week on the economic-data front, Friday was a busy one with a range of key figures on the U.S. consumer and a read on wholesale-level inflation.
The latest read on retail sales from the Commerce Department showed a 0.1% increase last month, compared to expectations for a 0.3% rise. Prices in September were unchanged, while forecasts called for a 0.1% rise. Excluding the volatile food and energy components at least helped put inflation in positive territory. Prices on that basis rose 0.2% for the month, but were still under expectations for an increase of 0.4%.
“The consumer is the dominant driver of economic activity, accounting for approximately 70% of expenditures-based GDP growth. Hence, it is often the case that so goes the consumer, so goes the broader economy,” economists at Deutsche Bank wrote in a note.
They added that while inflation-adjusted consumer spending has been growing at a 3% pace, underpinning 2% GDP growth, they find it surprising spending hasn’t been stronger.
“This could hint of deeper structural problems within the U.S. economy,” they warned.
But consumer sentiment figures from the University of Michigan painted a completely different picture of the consumer. The gauge rebounded in November from an unexpected tumble last month, rising to 93.1 from a final October reading of 90. Economists had forecast a smaller rise to 91.5 for November.
Ameriprise Senior Economist Russell Price said that there could be a confluence of factors affecting consumers and keeping them from spending their dollars.
“Interestingly, spending generally declines as the population ages, and according to the data, millennials appear to less materialistic than prior generations – at least for now. Or maybe consumers are not as truly confident in the outlook as they indicate,” Price said.
Keeping an eye on the retail sector, which has been pressured through the week thanks to weak quarterly figures from big names like Macy’s (NYSE:M). The department-store chain posted weaker-than-expected revenue figures as shoppers continue to turn to e-commerce alternatives, and the strong dollar kept international shoppers at bay.
Nordstrom (NYSE:JWN) suffered a similar fate after a quarter in which consumers slowed their purchases. The stock continued to be punished Friday, plunging more than 16% and hitting a new 52-week low of $50.43.
J.C. Penney (NYSE:JCP), though, beat expectations, though it posted an adjusted loss of 47 cents a share, with revenue in at $2.9 billion, topping forecasts for $2.88 billion. Sales for the quarter were up 5%.
Producer prices for the month of October, meanwhile, came in unexpectedly weak. The Labor Department said prices at the wholesale level declined 0.4% during the month, compared to expectations of a 0.2% tick higher. Excluding the volatile food and energy components, prices declined 0.3%, while Wall Street had widely anticipated a 0.1% increase.
While there’s still more than a month to go before the Federal Open Market Committee’s December meeting, analysts warn there’s still a hefty dose of data to digest before the central bank makes a final decision on when rates will rise.
Still, on the back of a more than 200-point decline on the Dow in the prior session, IG market analyst Alastair McCaig said Friday’s data looks more like a mountain to hike than a hill.
“Considering the depth and volume of Thursday’s comments [from Fed officials] the markets have had to absorb, it will take longer than a day for that sentiment to dissipate,” he wrote. “Until the next FOMC meeting, the likes of today’s retail sales figures and PPI data now look like hurdles that need to be cleared rather than potential reasons for change.”
Elsewhere in the market, global oil prices continued to bleed thanks to persisting concerns about the global supply glut. U.S. crude prices declined 2.4% to $40.74 a barrel. Brent, the international benchmark, shed 1.7% to $44.45 a barrel.
Metals, meanwhile, were mixed as gold traded along the flat line, falling slightly to about $1,081 a troy ounce. Silver declined 0.2% to $14.20 an ounce. Copper hit its lowest level in more than six years, declining 0.2% to under $2.17 a pound.
European equity markets continued the slide from the prior session after talk from the European Central Bank president that more stimulus would be required after 2016.
The Euro Stoxx 50, which tracks large-cap companies in the eurozone, shed 0.93%, while the German Dax declined 0.69%, the French CAC 40 declined 1%, and the UK’s FTSE 100 paced 0.98% lower.
The euro, meanwhile, traded down 0.58% against the U.S. dollar while the greenback was mixed against a basket of global currencies.