NEW YORK — Wall Street headed south on Thursday due to economic concerns in the U.S. and fears of global instability in Pakistan, where many apparel goods are produced, following the assassination of opposition leader and former prime minister Benazir Bhutto.
Bhutto's assassination at a political rally outside of Islamabad raised concerns of unrest abroad, sending investors fleeing from equities to the safety of U.S. Treasuries.
Domestically, the government said durable goods orders rose by 0.1 percent last month, far lower than the 2.2 percent gain economists had expected. In addition, the number of workers seeking unemployment benefits rose last week to 349,000 instead of an expected decline to 340,000.
At the end of the trading session, the Dow Jones industrial average skidded by 1.42 percent, or 192.08 points, to 13,359.61. The S&P retail index slid by just under 1 percent to 410.23.
One semi bright spot on the domestic economic front, although the jobs picture was mixed, was consumer confidence.
Consumers were in a slightly better mood in December, sending The Conference Board Consumer Confidence Index higher during the critical retail holiday selling period.
The overall Index climbed to 88.6 from 87.8 in November. While the Present Situation Index component dropped to 108.3 from 115.7 last month, the Expectations Index rose to 75.5 in December from 69.1.
"This month's slight gain in confidence was due solely to an increase in the Expectations Index," said Lynn Franco, director of The Conference Board Consumer Research Center.
She noted consumers' short-term outlook regarding business conditions, employment, inflation and stock prices improved marginally, while they were less negative about the near-term future. However, Franco also pointed out that persistent declines in the Present Situation Index indicate the economy is still losing momentum. And this month's report now has pessimists outnumbering optimists in their assessment of the current job market.
Overall, the jobs front was a mixed picture. Consumers who said jobs are "hard to get" rose to 23.5 percent from 21.4 percent, while those claiming jobs are "plentiful" declined to 22.7 percent from 23.3 percent in November. Yet the future short-term jobs outlook was brighter. The percentage of consumers who said they expect more jobs in the months ahead inched up to 11.2 percent from 10.6 percent. Still, the proportion of consumers who expect their incomes to rise in the months ahead fell to 19 percent from 19.4 percent.In addition, consumers who expect business conditions to worsen in the next six months fell to 14.1 percent from 16.6 percent. Those who anticipate business conditions to improve rose to 13.8 percent from 12.4 percent.
Separately, as final numbers start to come in, the holiday season looks like it will be only moderately successful.
That was the conclusion of Michael Niemira, chief economist and director of research, International Council of Shopping Centers, who spoke Thursday on a conference call hosted by Dana Telsey of the Telsey Advisory Group
A slowdown in consumer spending, a continued shift toward gift cards as a preferred option, discounting, growing concerns over a possible recession and other factors combined to keep holiday results mild, he noted.
ICSC still forecasts a gain for same-store sales in the November-December period of 2.5 percent, Niemira said.
"I think it was a moderately happy holiday," said Niemira. "Essentially our view is the trends that we see continue to paint a picture of a moderate performance for the season."
Previously ICSC said that weekly chain store sales increased 2.8 percent in the week ended Dec. 22. Anecdotal evidence suggests there were strong sales over the weekend prior to Christmas as well, but final numbers aren't in yet. Going into the weekend, sales were expected to account for 9 percent of total holiday season sales, Niemira said.
However, the sales over the weekend on their own probably weren't strong enough to soothe fears about holiday results, he said.
Gift card redemptions, which start mostly after the holidays and continue through January, could also alter the final picture for the year. Typically consumer surveys show that 30 percent of gift cards are redeemed after Christmas through the end of January, Niemira said. That number could increase this year.
Initially strong results in November surprised the industry, but the season was heavily promotional as it ran its course, he said.
Since the beginning of the year, ICSC had said that there was a pronounced and consistent decline in the pace of consumer spending. Starting last winter, chain store numbers showed a decline, which continued all year and into the holiday season, Niemira said."The consumer clearly pulled back this year; the holiday season performance is pretty much just an extension of the same trend," he said.
Not everything was dismal during the holidays, though. Income levels have been better than other economic indicators, which helped offset some of the drag from factors like higher energy costs, Niemira said. The perceived sales strength in November was due in part to that, combined with pent-up demand, he added. The boost was temporary, as the remainder of the holiday season did not sustain those results, but it explains the perceived strength, he noted.
Discounting occurred across the board through the holiday season, Niemira said, but the apparel sector in particular struggled due to more long-range factors.
"Apparel has been losing market share as a gift, so it's working against some long-term trends," he said.
In looking at results from the holiday season, Niemira said, it is important to note where consumers' holiday dollars are moving. Consumer surveys indicate that more is being spent on services.
The electronics sphere has also been picking up share, defying general trends for the season, Niemira said. By comparison, general merchandise, apparel, furniture and other similar products have all declined as a share of total consumer dollars spent during the season.
The continued popularity of gift cards impacted holiday results. Gift cards reached a record 18 percent share of holiday spending last year, and Niemira said this year the cards are expected to claim between 18 and 20 percent of holiday sales. Final results won't be available until after January, when consumers typically redeem the cards.
My character, Dinah Madani, is just the coolest, [most] badass woman imaginable," says @amberroserevah. The actress stars in @marvel's newest series on @netflix, @thepunisher. To prepare for her role, Revah sat down with Homeland agents to get a real sense of with Dinah's day-to-day life is really like. Read our full interview on WWD.com. #wwdeye (📷: @jilliansollazzo)
A scene from the 91st annual @macys Thanksgiving Day Parade. The parade, which boasts 50 million TV viewers and 3.5 million on-site spectators, is considered one of the largest and most watched parades in the world. (📷: Jason Szenes/EPA-REX)
The circus came to @bloomingdales 59th Street on Tuesday night and lit up Lexington Avenue with acrobatic dancers, death-defying knife throwing, sword swallowing and aerial acts with no net. The 45 minutes of theatrics built up to unveiling the holiday windows depicting @swarovski crystal-encrusted circus pieces and scenes from “The Greatest Showman” – songs from the soundtrack included. See the rest of the photos on WWD.com #wwdfashion (📷: Joshua Scott)
The psychedelic fashion that pervaded the ’60s is back with an exhibit at the @museumofcityny. “Mode New York: Fashion Takes a Trip” chronicles the changing styles from 1960 through 1973 and features designers such as @ysl, @oscardelarenta and more. The exhibition, which is on display through April 1, is organized into four periods: First Lady Fasion, Youthquake, New Bohemia and New Nonchalance. Pictured here is model Pat Bardonella during the Garvey Day Parade in 1968. (📷: @kwamebphoto) #wwdeye #wwdfashion
“People should be a lot more honest in expressing both the dark and light of themselves. We need to give each other the space to do that because it’s the only way we can grow and evolve,” says @noelwells of her new film “Mr. Roosevelt,” which is largely based on her own struggles. Unexpectedly leaving @nbcsnl in 2014 after just one season, Wells felt set back in her self-esteem and career trajectory. She quickly refocused her energy to more personal projects, which led to the completion of “Mr. Roosevelt.” Read the rest of WWD’s interview with the “Master of None” actress on WWD.com #wwdeye (📷: @jilliansollazzo)
@barbrastreisand is giving fans a chance to see her perform up close in a new concert series, which makes its debut on @Netflix today. From behind-the-scenes takes to her concert performance in Miami last December, the two-hour streaming special captures Streisand in her element. Pictured here is the singer/actress photographed for WWD in 1963. (📷: Palmieri Tony) #wwdeye #wwdarchive
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion (📷: Dominique Maître)
@imanshumpert is diving deeper into his creative endeavors and relaunching his clothing line, Post 90s, and is helping to raise money for the hurricane victims in St. Maarten with a jersey he’s designed with his brother. The Cleveland Cavaliers player talked to WWD about kneeling during the national anthem, working with fashion brands and how he wants to be more than an @nba player. Read the interview on WWD.com #wwdfashion (📷: George Chinese)