Worries over a slowing economy kept buyers on the sidelines on Wall Street today, leaving panicky investors to dump shares — especially in the consumer discretionary sector.
Hardest hit with the sector were retail stocks, which dragged down other market segments.
Wall Street also weighed the Federal Reserve’s Beige Book, which noted weakness in the manufacturing sector, but a somewhat stable housing market. And a consumer confidence report from Thomson Reuters showed declining consumer sentiment.
As a result, the Dow Jones Industrial Average dropped 365 points, or 2.2 percent, to 16,151, while the S&P 500 lost 2.5 percent to close the day at 1,890. The Nasdaq plunged 3.4 percent to finish at 4,526.
The S&P Retailing Industry Group Index fell 4.5 percent to 1,171. Dragging the retail segment down were The Buckle Inc. with a 5.6 percent decline to $26.81 and Zumiez Inc. with a 5.5 percent drop to $16.06 and Men’s Wearhouse Inc. with a 5.8 percent decline to $10.86. Shares of Amazon Inc., the largest market capitalization stock in the consumer discretionary sector, lost 5.8 percent to close at $581.81.
But there were a handful of gainers, including J.C. Penney Co. Inc., which rose 0.8 percent increase to $7.36 on a day the company acknowledged that it would be closing seven of its 1,020 stores. Stein Mart Inc. also gained 1.3 percent to $6.49.
Earlier in the day, European indices were varied. The FTSE 100 gained 0.5 percent to 5,961 while the CAC 40 increased 0.3 percent to 4,392. The DAX fell 0.2 percent to close at 9,961. In Asia, the Nikkei 225 gained 2.9 percent to 17,716 while the Hang Seng rose 1.1 percent. In China, the Shanghai Index dropped 2.4 percent to 2,950.
The Federal Reserve District’s Beige Book noted that growth of consumer spending “ranged from slight to moderate in most districts, while auto sales were somewhat mixed, as activity has begun to drop off from previously high levels in some districts. Reports of tourism activity were also mixed.”
Regarding industrial activity, the Fed said excluding autos and aerospace, “most manufacturing sectors displayed a weakening in activity. Also, fewer districts reported increases in manufacturing activity than decreases during the latest reporting period.”
The Fed also noted that reporting districts said a strong dollar continues to have a “negative impact on demand, while some [districts] noted that low energy prices have had a smaller, mixed effect.”
By market, consumer spending was “strong in Minneapolis. New York, Richmond and Dallas noted that sales were sluggish or had softened. Unseasonably warm weather was blamed for damping overall sales in Cleveland, Richmond and Dallas, and for weaker apparel sales in New York.”
In the consumer confidence report Thomson Reuters/Ipsos said the January report erased December’s sentiment gains “as consumers confront the continuing turmoil abroad and in the financial markets.” The Thomson Reuters/Ipsos Primary Consumer Sentiment Index dropped to a reading of 54.3, which is down from December’s 55.2 reading and 57.6 in the same month last year.
Jharonne Martis, director of consumer research at Thomson Reuters, said “actual job security remains strong, but expectations is down across a couple of indicators. This looks like the public has general worries about the markets and national economic health. Consumers are most concerned with current conditions, including the U.S. stock market, and global turmoil.”
Martis said as a result, consumers “are no longer spending freely, splurging or doing as much impulse shopping as in the past.”