Investors pushed retail stocks into negative territory for the year this past week and the Dow Jones Industrial Average slipped below 12,000 as Federal Reserve chairman Ben S. Bernanke acknowledged the recovery had slowed and that the fate of the economy rests largely in the hands of the consumer.
The S&P Retail Index fell 1.7 percent, or 8.80 points, to 496.76 Friday, marking a 2.7 percent drop for the week. The sector is now down 2.2 percent for the year, having set an all-time high of 552.11 on May 13.
The Dow Jones Industrial Average fell 1.4 percent, or 172.45 points, to 11,951.91 Friday, its first close below 12,000 since March and a drop of 1.6 percent for the week.
Shares of the embattled American Apparel Inc. fell 2 cents to 87 cents Friday, as Toronto-based investment firm Goodman & Co. reported in a regulatory filing that it had acquired 7.4 million shares of the company, or 7.5 percent of those outstanding.
Investors had been betting on stronger job growth — the economy averaged payroll increases of about 220,000 in February, March and April — but the modest gain of 54,000 new jobs in May splashed cold water on hopes of a steady climb back to economic vibrancy.
“U.S. economic growth so far this year looks to have been somewhat slower than expected,” Bernanke acknowledged during a speech Tuesday. GDP growth slowed to an annual rate of 1.8 percent in the first quarter from 3.1 percent in the fourth.
“The ability and willingness of households to spend will be an important determinant of the pace at which the economy expands in coming quarters,” he said.
Bernanke said household spending was caught between overall improvement in the job market, payroll tax cuts and lower debt burdens on one side and higher food and energy prices, declining home values, tightness in the credit markets and still-high unemployment on the other side.
Investors will get fresh readings on how that all balances out for consumers next week, when the government reports Tuesday on May results for retail sales, consumer prices Wednesday and housing starts Thursday. The Thomson Reuters/University of Michigan Surveys of Consumers will be updated on Friday, giving a window into consumer confidence.