NEW YORK (AP) — Retailers are plunging Friday as investors worry that the holiday shopping season will be a dud. Stocks are slumping to a big weekly loss, their worst since August, after six straight weeks of gains. The price of oil continued to fall.
IN THE RED: The Dow Jones industrial average fell 157 points, or 0.9 percent, to 17,291 as of 2:35 p.m. Eastern. The Standard Poor’s 500 index gave up 16 points, or 0.8 percent, to 2,029. The Nasdaq composite index slipped 57 points, or 1.2 percent, to 4,947.
RETAIL WOES: Retailers tumbled after department store operator Nordstrom reported disappointing third-quarter results and cuts its outlook for the year. Competitor Macy’s also posted weak results and lowered its guidance this week, and both stocks hit two-year lows on Friday. Department stores were hammered, and other retailers also dropped, including Ross Stores and TJX, the parent of TJ Maxx.
Nordstrom sank $10.76, or 17 percent, to $52.71. J.C. Penney’s results were about equal to analyst projections, but its stock lost $1.48, or 16.9 percent, to $7.31.
HOLIDAY WORRIES: The latest reports were another warning sign about the holiday shopping season, which will soon kick into high gear. Black Friday is in two weeks and Christmas is six weeks away. Video game retailer GameStop sank $6.48, or 15.4 percent, to $37.69. Watchmaker Fossil Group plunged $17.36, or 34 percent, to $33.65. Fossil posted disappointing earnings Thursday afternoon and also said it will buy activity tracker maker Misfit for $260 million. Its shares hit their lowest price in five years.
DON’T CRY IN YOUR EGG NOG: Stifel Nicolaus analyst Richard Jaffe suggested the steep drop in retail stocks was an overreaction. Shoppers will spend plenty of money this holiday season, he said, and while they’re spending more money on smartphones and TVs and other big items than they used to, there will still be plenty of socks and sweaters given as gifts over the holidays.
“Christmas is boxed gifts,” Jaffe said. “There will be a lot of gift giving, a lot of apparel sales.”
Jaffe noted that Americans’ shopping habits have changed a lot over the last few years. Consumers are making spending more on homes, cars, and vacations. Aging baby boomers don’t buy clothes as often as they used to, and younger shoppers are more interested in technology.
WEAK SPENDING: U.S. retail spending edged up just 0.1 percent in October, a bit less than analysts expected. Prices charged by farmers, manufacturers and other producers fell in October. Both measurements show there is little sign of inflation in the U.S. economy. When inflation is higher, consumers have an incentive to spend more money.
THE BIG PICTURE: This week is set to be the worst one for stocks since late August. The markets tumbled that month on concerns that growth in China’s economy was slowing sharply, which would pressure growth worldwide. Stocks staged a modest recovery in September, then rallied in October. Now, stocks are heading lower again, and have lost ground six out of the last seven days. The SP 500 is now slightly lower again for the year.
OIL FALLS FURTHER: The price of oil continued to fall after the International Energy Agency said commercial inventories reached almost three billion barrels at the end of September, a record. The IEA also said growth in global demand will slow down next year. Oil prices have dropped because demand can’t keep up with ever-increasing supply, so stockpiles keep growing.
U.S. crude slumped $1.01, or 2.4 percent, to $40.74 a barrel in New York. It’s dropped about 13 percent this month and is at its lowest price since late August. Brent crude, which is used to price international oils, lost 88 cents, or 1.9 percent, to $44.31 a barrel in London.
Jim Ritterbusch of the oil trading firm Ritterbusch Associates said crude could fall another $3 to $4 a barrel. It’s gone as low as $37.75 this year.
COMMODITIES SINK: Oil and other commodities are dropping as the Federal Reserve gets ready to raise interest rates while central banks in Europe and Japan consider new economic stimulus moves. That combination could make the dollar even stronger, making dollar-denominated commodities costlier to buyers using yen, euro and other currencies.
The price of gold fell 10 cents to $1,080.90 an ounce. Silver fell for the eleventh day in a row, losing 2.1 cents to $14.20 an ounce. Copper dipped slightly to just under $2.17 a pound. All three metals are at their lowest levels in six years.
PERRIGO SAYS NO: Shareholders of Irish drugmaker Perrigo rejected a $26 billion offer from generics maker Mylan of the Netherlands. Mylan logged the biggest gain on the SP 500, adding $5.95, or 13.8 percent, to $49.15. Perrigo fell $8.65, or 5.5 percent, to $147.90.
BONDS, CURRENCIES: U.S. government bond prices rose. The yield on the 10-year Treasury note slipped to 2.27 percent from 2.31 percent late Thursday. The euro declined to $1.0732 from $1.0791 and the dollar edged up to $122.85 yen from 122.62 yen.
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Follow Marley Jay at twitter.com/marleyjayAP
His work can be found at http://bigstory.ap.org/journalist/marley-jay
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