NEW YORK — Inflationary woes along with concerns that consumers are not going to spend as much this holiday as they did in prior years, gave investors little reason to trade up retail stocks last week.
As a result, the WWD Composite Stock Index dropped 1 percent to 1,040.54 Friday from 1,050.73 in the prior week. The S&P 500 fared worse, declining 2.7 percent for the week, to 1,195.9 from 1,228.81.
What’s needling away at investors is the “Katrina effect,” a term coined for the idea that as raw material costs, energy prices and joblessness rises in the wake of the hurricane, consumer spending will sharply decline.
On Thursday, same-store sales came in mixed across all channels. Results were better than August, but analysts said this was due to steeper markdowns. Retailers had pulled the trigger on sales in the second week of September because they needed to draw shoppers into their stores.
According to the International Council of Shopping Centers, aggregate same-store sales among the 71 retailers it tracks rose 4 percent last month, ahead of its estimate for a 3 percent gain. But Michael Niemira, chief economist and director of research at the ICSC, said September’s results were deceiving because they included gasoline sales at wholesale clubs, which were favorably affected by a nearly 50 percent increase in gas prices.
Another concern was news on Friday that payrolls dropped by 35,000. The Labor Department said the unemployment rate reached 5.1 percent, which is off a four-year low of 4.9 percent that was clocked in August. Still, economists said in research reports that the numbers could have been worse.