Fiscal Cliff Hits Confidence, Stocks

Retail shares retreat after fiscal debate hurts sentiment.

The fiscal cliff debate has taken its toll on the shopping psyche.

The Thomson Reuters/University of Michigan Surveys of Consumers said today that its Index of Consumer Sentiment fell to 72.9 for December from 82.7 in November.

Chris Christopher Jr., senior principal economist at IHS Global Insight, said the confidence index “fell over the fiscal cliff.”

“Since the presidential election, Americans have become increasingly worried over their personal finances, business conditions, and the economic outlook,” Christopher said. “The culprit is plain and simple – the fiscal cliff debate and fear of higher taxes.”  

The economic insecurity took a bite out of retailers on Wall Street. In the final hour of trading in New York, the S&P 500 Retailing Industry Group was down 1.2 percent, or 7.90 points, to 653.26, and the Dow Jones Industrial Average was off 1 percent, or 133.37 points, to 13,178.35.

The decliners included Sears Holdings Corp., down 7.4 percent to $40.94; Zale Corp., 4.2 percent to $4.14; Tumi Holdings Inc., 3.9 percent to $21.32; J.C. Penney Co. Inc., 3.3 percent to $19.43, and Michael Kors Holdings, 3.3 percent to $53.32.

Bucking the trend was Nike Inc., shares of which rose 6.4 percent to $105.34 after the firm posted lower second-quarter earnings that nonetheless topped analysts’ expectations.

European markets ended the day with lesser declines than those seen on Wall Street.

Frankfurt’s DAX dropped 0.5 percent to 7,636.23 as Milan’s FTSE MIB fell 0.4 percent to 16,333.95, London’s FTSE 100 declined 0.3 percent to 5,939.99 and Paris’ CAC 40 dipped 0.2 percent to 3,661.40.

Among those losing ground were Mulberry Group, down 5.7 percent to 11.76 pounds; Burberry Group, 1.9 percent to 12.23 pounds; PPR 1.2 percent to 141 euros; Marks and Spencer Group, 1.1 percent to 3.92 pounds; Tod’s, 0.9 percent to 96.25euros, and Salvatore Ferragamo, 0.8 percent to 16.85 euros.

The pound traded at $1.62 versus the dollar as the euro went for $1.32.