Before The Bell
Wall Street opened the day modestly to the upside yesterday, in spite of disappointing economic news on the jobs front. It would retain an edge until late in the afternoon when a slight selloff in the key averages shifted the close to the downside. Now, ahead of this morning's opening, the government just reported December figures for retail sales, which proved to be woefully disappointing, signaling that the holiday shopping season was a serious problem for chains and independent stores.
This key issuance followed a series of disquieting business metrics issued recently, headlined by yesterday's deeply disturbing release of weekly jobless filings, which surged to 965,000 in the latest seven-day stretch. Expectations for the week had been for 800,000 filings, up from 784,000 the week before. Continuing claims also rose during the week, a reversal of recent months. The high claims number came on the heels of a sharp decline in non-farm payrolls in December.
Looking at the retail sales numbers, they were chilling. To wit, December transactions fell 0.7%. A slight decline of 0.1% was the expectation. This was the first drop since April. Worse, if we back out autos, retail spending plunged 1.4%. Further, if we exclude auto sales and gasoline spending, the decline is 2.1%. Clearly, the economy is hurting. The equity futures, already modestly lower, gave little additional ground after the release.
However, disappointing numbers are not proving to be much of a headwind for Wall Street these days, as the stock market has continued to generally hold its own on optimism that President-Elect Biden is poised to push forward with a $1.9 trillion COVID-19 relief package. That effort will need to be adopted by Congress. He also last night said that he pledged to get 100 million vaccines into the arms of Americans in the next 100 days. He also pledged to get $2,000 into the hands of those struggling Americans.
As for the stock market, it opened higher and maintained an edge until the final hour on the Dow Jones Industrial Average and the S&P 500 Index. The NASDAQ, once up by some 150 points, also backed off to edge higher by just 40 points. The small-cap Russell 2000 also moved higher adding 43 points.
Looking at the day upcoming, the equity futures traded narrowly lower last evening as traders considered the details of President-Elect Biden fiscal stimulus proposal and assessed the potential for passage within a divided Congress. Experts maintain that the pace Mr. Biden has laid out for vaccinating Americans may fall short of needs. But we shall see.
As for this morning, recent action in the futures, as noted, suggests a weaker opening, but not a major selloff.
– Harvey S. Katz, CFA
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
