T3's Take 3: Retail Sales Stink, Driving Stocks Lower
Today's financial recap and tomorrow's financial outlook.
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Retail Sales Miss
The trading day got off to a weak start with the release of October retail sales.
Sales rose just 0.1% month-over-monthy, widely missing the 0.3% median Wall Street forecast.
Excluding autos and gasoline, sales rose 0.3%, while economists expected a 0.4% gain.
The news put a big hurting on retail stocks, which were also hit by weak earnings from JC Penney (JCP), JW Nordstrom (JWN), and Fossil Group (FOSL).
And in keeping with the trend in recent years, retailers continue to move up their holiday sales promotions earlier and earlier, perhaps out of desperation.
Incidentally, on a year-to-date basis, retail stocks are acutlaly outperforming the major averages, as judged by the Market Vectors Retail ETF (RTH).
US PPI data also missed expectations, which started the usual chatter about the Federal Reserve's monetary policy.
But even with today's weak data, Fed funds futures showed no change in expectations regarding a December rate hike.
The S&P 500 fell 1.1% to 2023.04, while the NASDAQ fell 1.5% due to broad-based weakness in technology stocks.
Traders were disheartened by a weaker-than-expected Euro-Zone GDP report, as well as a continued decline in crude oil prices.
The aforementioned retail sector led the decliners today off the data and earnings misses.
On the positive side, biotechnology and pharmaceutical names showed massive outperformance. The NASDAQ Biotechnology Index ETF (IBB) rose 1.1% to $323.64.
The 10-year US Treasury yield ticked lower in reaction to the equity market downdraft, while the VIX rose 9.6% to 20.14.
FitBit Smashed on Secondary
This morning, FitBit (FIT) announced that it priced its secondary offering at $29 a share, well below yesterday's $31.68 close.
The stock did not react well to the news, even though FitBit cut the size of its offering by 3 million shares. Plus, the stock had already declined almost 20% since the offering was announced.
Nonetheless, traders were worried about the impending supply coming on the market, and the stock was clobbered.
FitBit fell as low as $26.80 before closing at $27.86, down 12.1%.
The stock was probably also hurt by widespread weakness in underperforming high-beta growth stocks. Names like GoPro (GPRO), Twitter (TWTR), and Cyber-Ark Software (CYBR) took significant hits despite no company-specific news.
Empire Manufacturing for November will be reported at 8:30 a.m. ET Monday morning.
Overseas, Australian monetary policy meeting minutes will be released, as will Canadian manufacturing sales and New Zealand inflation expectations.
Dillard's (DDS), Agilent (A), and Urban Outfitters (URBN) will be reporting earnings.
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