Stocks inched forward in the U.S. and Europe Monday, but the drumbeat of bad economic news and dire consumer projections combined with the swings in the market over the past three weeks have left investors without a clear path forward.
The S&P Retail Index gained 0.7 percent, or 3.23 points, to 469.45, as the Dow Jones Industrial Average rose 0.3 percent, or 37 points, to 10,854.65. Even after that gain, retail stocks are down 12.9 percent for the month so far and fears surrounding a U.S. malaise and Europe’s sovereign debt crisis remain sharp.
Europe’s markets led the way and largely held to their upward trend Monday. The FTSE 100 in London closed up 1.1 percent and the FTSE MIB in Milan gained 1.8 percent.
Luxury and retail stocks were mixed.
Shares of Guess Inc. gained 4 percent, and Tiffany & Co. rose 2.9 percent on Wall Street. In Europe, French Connection gained 12.2 percent and Ferragamo rose 4.1 percent, though Marcolin declined 1.6 percent and Mulberry fell 6 percent. In Hong Kong, where the Hang Seng Index increased 0.5 percent, Prada fell 6 percent.
Markets were buoyed by energy stocks, which rose on the hopes that Libya’s oil exports would resume should the rebel forces that advanced into Tripoli Monday stabilize the country.
However, the Organization for Economic Cooperation and Development said second-quarter GDP growth in its 34 member countries — which include the U.K., the U.S., France and Germany — slowed to 0.2 percent from 0.3 percent in the first quarter. That’s the fourth-consecutive quarter of economic deceleration for the group.
And IHS Global Insight projected growth in U.S. back-to-school sales would slow to 2.8 percent this year from 5 percent last year, when the total take amounted to almost $38 billion.
Investors are looking ahead to a meeting of central bankers in Jackson Hole, Wyo., with many speculating Federal Reserve chairman Ben S. Bernanke will hint at steps to help boost the U.S. economy during a speech Friday.
But the devil might be in the demographic details. And even though the U.S. still has a growing working-age population — while Japan and other developed countries have seen their potential workforce diminish — that growth has slowed and could ultimately pressure merchants.
“All of the monetary and fiscal stimuli in the world will not make America young again,” said John Lonski, team managing director of Moody’s Analytics’ economics group, in a recent analysis titled, “ ‘Overleveraged’ and ‘Over-the-Hill’ Consumers Weigh on the U.S.’ Long-Term Outlook.”
Lonski said growth in consumer spending was generally stronger when there were more Americans in the 15-to-49 age range, noting that the year-over-year growth in the U.S. working-age population has slowed to a record low of 0.75 percent.
Consumer spending grew at an annual rate of 3.2 percent from 1971 to 1996, and then slowed to 2.8 percent, Lonski said, noting that demographic trends suggest spending growth will moderate toward 2 percent to 2.5 percent.
The aging population also poses problems for the housing market and costs for programs such as Medicare.
“Fiscal austerity at all levels of government and an aging population signal slower economic growth, less price inflation and lower benchmark borrowing costs compared to what many currently anticipate,” Lonski said.
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