The housing slowdown and higher energy costs took their toll on holiday spending this year, with retail sales rising only 3% over last year. Sales were also hurt by the relatively warm temperatures, which cut into apparel sales. The last-minute weekend rush on December 23-24 gave the sector a 23% boost, but revenues were still the slowest they have been since 2002. Wal-Mart, which will issue a preliminary report on December's results this weekend, is forecasting a slim gain of "up to 1%." The S&P 500 Retailing Index remains stable, however, falling less than 1% since Oct. 31. Apparel fell behind overall retail during the holiday season, but no individual category did particularly well this year. Retailers are hopeful that the post-Christmas week will bring some cheer to the season as gift-card recipients come to stores to redeem their certificates. The only bright spot in the sector was online retail, with Amazon.com posting its best holiday season ever and Yahoo Shopping seeing a 34% rise in December over a year earlier.
• Sources: Bloomberg, Wall Street Journal, USA Today, MarketWatch
• Related commentary: U.S. Retail Sales Relatively Strong as Holiday Season Ends, Retailers' Heavy Discounting Should Pressure Q4 Margins, Holiday Retail Sales Falling Short
• Potentially impacted stocks and ETFs: Wal-Mart (NYSE:WMT), Federated Department Stores (FD), Target (NYSE:TGT), Amazon.com Inc. (NASDAQ:AMZN), Yahoo Inc. (YHOO). ETFs: Retail HOLDRs (NYSEARCA:RTH), Consumer Discretionary SPDR (NYSEARCA:XLY), Internet HOLDRs (NYSE:HHH), First Trust Dow Jones Internet Index (NYSEARCA:FDN)
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