Retail sales in September continued to show that consumers aren’t ready to splurge, and related exchange traded funds (ETFs) aren’t ready to perform.
The 1.2% drop in sales was even worse than expected, and was the largest plunge in three years, reports Martin Crutsinger for the Associated Press. Economists had been expecting a 0.7% decline. The last time retail sales declined so much was in August 2005, when they fell 1.4%.
Auto sales led the weakness, falling 3.8% on difficulties of finding financing. This is the first time sales have fallen for three consecutive months since the government started keeping records in 1992.
Wholesale prices also declined for a second straight month, by 0.4%. Core wholesale prices, which exclude food and energy, rose by 0.4%, which was double what economists expected.
Businesses increased their inventories by the smallest amount in five months, signaling concerns about the slowing economy. Inventories rose by 0.3% in August, the weakest gain since March.
Oil prices have dropped to their lowest point in 13 months, thanks to expectations that a continuing weak economy will crimp crude demand, says Ikuko Kao for Reuters. Crude was down to $74.87 a barrel this morning.
- SPDR S&P Consumer Discretionary (XLY): down 28.6% year-to-date; down 25.6% in the last month (black line)
- Retail HOLDRs (RTH): down 19.3% year-to-date; down 23.4% in the last month (green line)
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.