The S&P Retail Index dropped 1.9 percent Friday, closing below 400 for the first time since early November and capping off a crazed week for traders.
This story first appeared in the January 25, 2010 issue of WWD. Subscribe Today.
First, investors worried over tighter lending conditions in China on Wednesday, then the specter of U.S. banking reform Thursday and, finally, a tech sell-off and concerns that Congress might not give Federal Reserve chairman Ben S. Bernanke a second term Friday.
The end result for the four-day trading week was a 3.1 percent drop for the retail index, which closed at 395.64. The Dow Jones Industrial Average sank 2.1 percent Friday to 10,172.98 and registered a 4.1 percent drop for the week.
Among the major international markets, the steepest declines came in Hong Kong, where the Hang Seng Index dropped 4.3 percent for the week, and Tokyo, where the Nikkei 225 slid 3.6 percent. Of 172 U.S. and European stocks monitored by WWD, 143 had decreases last week versus just 24 with gains and five that were unchanged.
Underlying the day-to-day movements in equities — and basically dictating conditions for retailers — is the continued weakness in the job market. Forty-three states reported a higher rate of unemployment last month, according to a Labor Department report Friday.
And Charles McMillion, president and chief economist at MBG Information Services, said the employment report was even worse than it looked and indicated the possibility of a double-dip recession is rising.
“If the unemployed had not given up looking for work in December, the unemployment rate would have risen even higher — or not have dropped — in almost every state except Iowa, which was the only state reporting a small gain in employment,” he said.