Eurozone Recession Undermines Oil's Slip, ETFs | ETF Trends

October was a record month for sagging retail sales, proving further that consumers are tightening up their wallets, and not adding to a domestic economic boost for Wall Street or exchange traded funds(ETFs).

The decline in auto sales led the drop, but clothing and furniture was also left on the shelves. Martin Crutsinger for Associated Press reports that the Commerce Department said retail sales fell by a record 2.8% last month, surpassing the old mark of a 2.65% drop in November 2001 in the wake of the terrorist attacks that year.

  • SPDR S&P Retail (XRT), down 40.5% year-to-date

Retail Exchange Traded Funds (ETFs)

In turn, Wall Street is not hopeful, even in light of a chance of another rate cut, leaving the Dow Jones Industrial Average to fall another 250 points midday. Any gains from the latest rally were cashed in as there is little comfort for investors to park and stay awhile. Sara Lepro and Joe Bel Bruno for Associated Press report some retreat was to be expected after such a big advance, in which the Dow rallied more than 550 points after falling near its lows for the year.

The eurozone is officially in the midst of a recession as 15 of their economies shrank for the second quarter in a row.

The euro zone shrank 0.2% in both the third and second quarters from the quarter before and another interest rate cut may be in the making. Two consecutive quarters of economic shrinkage is the traditional definition of a recession, reports Aiofe White and Pan Pylas for Associated Press. The biggest threat is a sharp drop off in consumer spending which would push the jobless rate higher.

  • SPDR Dow Jones Euro STOXX 50 (FEZ), down 46.5% year-to-date

Europe Exchange Traded Funds (ETFs)

In response to Europe’s economic status, oil slid to $58 a barrel, undermined by the U.S. stock market futures dropping.

Benchmark U.S. crude futures for December fell to a low of $57.11, reports Christopher Johnson for Reuters.

Numbers and signs had confirmed what most analysts had expected, that industries and consumers are tightening up on spending and energy use.

  • United States Oil (USO), down 35.3% year-to-date

Oil Exchange Traded Fund (ETF)

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.