By Jennifer Yousfi
The U.S. markets took a beating yesterday (Thursday) as retail sales sputtered and jobless claims surged.
At the New York close, the blue-chip Dow Jones Industrial Average Index had posted a loss of 344.65 points (-2.99%), to trade at 11,188.23. The tech-laden Nasdaq Composite Index dropped 74.69 points (-3.20%), to reach 2,259.04. And the broader Standard & Poor’s 500 Index lost 38.16 points (-2.99%), to settle at 1,236.82.
Disappointing August retail sales reinforced that the surprising 3.3% boost in U.S. gross domestic product (GDP) in the second quarter, due in large part to the government’s stimulus checks, won’t be repeated in the third.
Discount retailers such as Wal-Mart Stores Inc. (WMT), which saw a 3% increase in same-store sales in August, continue to do well. But upscale retailers like Nordstrom Inc. (JWN), which saw an 8% decline in sales for the month, are struggling.
The retail sales figures matched the U.S. Federal Reserve’s findings in its Beige Book report released this week. Strapped consumers continue to spend on consumer staples but are forgoing pricier, discretionary purchases.
“Consumer spending was reported to be slow in most districts, with purchasing concentrated on necessary items and retrenchment in discretionary spending,” said the Beige Book, the Washington Post reported. The report is put together based on economic reports from the Fed’s 12 districts across the nation.
In a separate report also released yesterday, the Labor Department announced new unemployment claims increased 15,000, bringing, the total to 444,000, well above the 425,000 expected according to Reuters data.
“It's going to be a while before people regain confidence in the economy and the market,” John Carey, a Boston-based money manager at Pioneer Investment Management, which oversees about $300 billion, told Bloomberg News. “The latest retail sales and jobless claims numbers and earnings reports don't give people the sense that we're about to turn the corner.”
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Stocks Plunge Sharply on Retail, Unemployment Data