U.S. stocks and exchange traded funds (ETFs) are in the red this morning on weaker than expected retail sales, a good indicator of consumer confidence.
The markets two month rally has been put on hold as the Commerce Department released data indicating that retail sales 0.4% in April. Prominent economists anticipated retail sales to remain flat. This news is detrimental to a rebound and recovery of the economy due to its close linkage to consumer spending, which constitutes nearly two-thirds of all U.S. economic activity. The SPDR Retail ETF (XRT), dropped nearly 3% in intraday trading, despite being up 30.2% year- to-date.
Another blow came to the housing market today, when RealtyTrac announced that the number of U.S. homes in foreclosure jumped 32% in April from a year ago, reports Adrian Sainz for the Associated Press.
The Obama administration has come up with yet another clever way to infiltrate capital into financial institutions. They propose to take bailout repayments from large institutions and hand then out to smaller. community banks, those with assets of $500 million or less. Additionally, Treasury Secretary Geithner has publicly announced that he intend to unleash a complete overhaul of the financial system within the next few weeks, reports Christopher S. Rugaber of the Associated Press. This sent uncertainty throughout the financial world, sending the SPDR Select Financial ETF (XLF), down 3% in intraday trading and for the year.
In the technology world, the European Union fined Intel Corp (INTC) for using illegal sales tactics to deliberately keep competitors out of the European market, especially chip maker Advanced Micro Devices (AMD). In particular, Intel was offering rebates and financial incentives to customers that made it impossible for AMD to grab European market share. This sent shares of the Technology Select Sector SPDR (XLK) down nearly 2% in morning trading; INTC is 4.5%.
The Dow Jones Industrial Average was down 1.7% and both the S&P 500 and Nasdaq dropped nearly 2% in morning trading.
Kevin Grewal contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.