Retail stocks fell 1.7 percent Monday, hitting lows not seen since February as debt-obsessed investors worried over consumers’ continuing move away from plastic.
Outstanding revolving loans to consumers, including credit-card debt, fell at an annual rate of 12 percent in April, the 19th consecutive monthly decline registered by the Federal Reserve. Total consumer credit inched up at an annual rate of 0.5 percent for the month, a gain tempered by downward revisions to the first-quarter numbers.
The weak credit report and fear that Europe’s financial troubles could spread pressured retail stocks, said David Strasser, an analyst at Janney Capital Markets.
“Everybody’s now looking to back-to-school as the decisive moment to really get a read on the consumer,” Strasser said. “The summer’s probably just going to be a grind.”
The burst of spending earlier this year might have just been pent-up demand, Strasser said, adding, “No one realistically knows what’s going to happen.”
The S&P Retail Index fell 7.30 points to 419.64 after falling 4 percent on Friday on news that the U.S. added fewer jobs than expected in May. The Dow Jones Industrial Average slid 1.2 percent, or 115.48 points, to 9,816.49, adding to the 3.2 percent drop Friday.
Of the 172 stocks tracked by WWD, the steepest declines came from American Apparel Inc., down 14.2 percent to $1.35; Coldwater Creek Inc., 12.3 percent to $4.20; Quiksilver Inc., 11.6 percent to $4.18, and Liz Claiborne Inc. 8.5 percent to $5.08.
Investors in Asia picked up where Wall Street left off on Friday, driving the Nikkei 225 down 3.8 percent to 9,520.80 in Tokyo and the Hang Seng Index down 2 percent to 19,378.15 in Hong Kong.
European issues were also down, but less so, with the CAC 40 off 1.2 percent to 3,413.72 in Paris; the FTSE 100 down 1.1 percent to 5,069.06 in London, and the DAX down 0.6 percent to 5,904.95 in Frankfurt.