US stocks declined Wednesday morning following a report that showed poor retail sales in December.
Wednesday, January 14, 2015
The numbers were a disappointment and led analysts to speculate that falling oil prices are having an adverse effect on consumer purchasing.
Shares fell for a fourth consecutive day. The S&P 500 dropped 0.8%, the Nasdaq fell 0.9% and the Dow declined 1.0%.
Even with the low cost of gasoline, retailers fared worse than expected during the busiest shopping season of the year. Retail sales lost 0.9% according to a Commerce Department report on Wednesday. Most economists expected a decline closer to 0.2%. Not including gas and car sales, retail sales dipped 0.3%, compared to an anticipated 0.5% gain.
Consumers have changed their shopping habits in recent years, researching deals and sales before going out to the stores. As a result, retailers bear the onus of putting together the most competitive offers possible.
Retails sales decline sparks global growth fears
Investors are analyzing global economic trends like changes in monetary policy and fourth-quarter earnings as a means of grasping fluctuations in the US market, according to The Wall Street Journal. As a result, some have attributed the decline in retail sales to global economic stagnancy. By these measures, it is not surprising that the retail sales report came out the day after the World Bank reduced its global growth outlook for 2015.
“Global growth and deflation worries … are really what are gripping the market right now,” Chris Gaffney, senior market strategist at EverBank Wealth Management, told The Wall Street Journal. “When we see these big drops [in commodity prices] investors start worrying about global demand, and therefore future global growth.”
With a number of possible explanations, it remains to be seen what caused retail sales to decline so sharply. Most likely, it was a combination of factors. Economists had predicted sales will gain in 2015 due to robust job creation – that is still a distinct possibility, even with the most recent let down.
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