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Wall Street Strategies has been providing independent stock market research since 1991 to individual, retail and institutional clients through a balanced approach to investing and trading. Charles Payne, our founder and chief analyst, is routinely sought after for his stock market, political,... More
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  • THE STRUGGLE CONTINUES AT DOW 14,000 By WSS Research Team 0 comments
    Feb 13, 2013 1:45 PM

    By Carlos Guillen

    Stocks are having an overall down day as some rather mixed economic data are shaking investors' fragile enthusiasm, which has had the Dow Jones Industrial Average holding on to the infamous 14,000 mark over the last couple of weeks.

    Perhaps a bit encouraging today was that retail sales data showed that the consumer is still holding strong. According to the U.S. Census Bureau, retail sales during January increased year-over-year by 4.4 percent and increased month-over-month by 0.1 percent, in line with the Street's consensus estimate, and representing the third consecutive month of increases. Excluding automobile related revenues, retail sales increased year-over-year by 3.6 percent and increased month-over-month by 0.2 percent, better than the Street's consensus estimate calling for a 0.1 percent month-over-month rise. Of the thirteen categories that make up the result, eight climbed, led by a 1.1 percent increase in general merchandise stores and a 0.9 percent rise in non-store retailers. Given the importance of consumer spending, as it represents 70 percent of gross domestic product (GPD), the rise in retail sales may help to assuage the belief that GDP growth in the first quarter may not come in as strong as many expect.

    On a slightly negative note, business inventories increased at a slower than expected rate in the prior month. According to the Commerce Department, business inventories edged up 0.1 percent month-over-month in December to a seasonally adjusted $1.62 trillion. That's a 5.1% gain compared to the year ago level, and the ratio of inventories to sales was 1.27, down from 1.28 in November. November's inventory growth was lowered to 0.2% growth from a 0.3% gain. Given that Inventories are a component of gross domestic product (GDP), the slower gain in inventories is likely to have a negative impact on GDP growth for this year if the trend continues.

    (click to enlarge)

    At the moment stocks are not showing signs of recovering from their earlier declines, as the Dow Jones industrial Average is down over 40 points and holding flat at this level. Some economic data bits of interest during the rest of the week will be initial claims, Empire State manufacturing, and Michigan sentiment, which may shake markets in the days ahead.


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