May 21, 2016

Stocks Drop on Retail Earnings Woes

Stocks Drop on Retail Earnings Woes WEEKLY UPDATE – MAY 16, 2016 “Stocks Drop on Retail Earnings Woes”, Stocks fell again for the third week in a row, driven lower by poor earnings reports from some major department store retailers. For the week, the S&P 500 lost 0.51%, the Dow fell 1.16%, the NASDAQ dropped 0.39%, and the MSCI EAFE lost 0.46%.[1] Despite a growing economy and strong labor market, Americans didn’t shop as much as retailers expected last quarter, leaving some puzzled over the disconnect. Many retail giants posted dismal earning results for the first quarter. Among the problems: same-store sale declines, falling traffic, and an inability to predict apparel trends.[2]  Even industry insiders aren’t sure what’s going on, and some say that the retail doldrums are bringing back memories of the last recession. However, economists may have some answers. Though consumers are doing much better than they did in the immediate post-recession recovery, some worry lingers, causing people to save more instead of spending. As the cost of housing and healthcare has increased, many Americans also don’t have as much discretionary money to spend.[3] The good news is that Americans are still spending-just not the same way they […]