By Carlos Guillen
Equity markets are having a rather shaky trading session as disappointing retail sales during the Thanksgiving weekend have been able to offset any enthusiasm coming from better than expected manufacturing data.
During the trading session today, the Institute for Supply Management (ISM) released its Purchasing Managers' index (PMI), considered by many to be a very important health indicator of the manufacturing industry here at home. PMI in November clocked in at 57.3 percent, increasing from the 56.4 percent reported for October and landing above the 55.5 percent consensus estimate, reaching the highest level since April 2011 when it reached 59.4 percent. Given that a reading above 50 percent indicates the manufacturing economy is generally expanding, this PMI result represents the sixth consecutive month of overall expansion. The result was also surprising given that the Chicago PMI index released last Wednesday declined to 63.0 in November from 65.9 in October, although it did land better than the forecasted 60.6 percent.
New orders in the ISM report, considered to be an important leading indicator, did not show weakness either; instead, new orders demonstrated an encouraging up tick. In fact, new orders in November rose to 63.6 from 60.6, also indicating growth for the sixth consecutive month. Another notable point from the ISM report was that the Employment component increased to 55.6 from 53.2, representing the fifth consecutive month of growth in the Employment Index.
Also encouraging today was that PMI data from other major economies demonstrated moderate expansion as well and gave hope that accelerating growth would not be too farfetched in the near term. The purchasing managers' index from HSBC Holdings Plc and Markit Economics showed China's manufacturing remained in expansion mode, with the index landing better than expected at 50.8, and the euro zone's PMI index increased from 51.3 to 51.6.
All the encouraging PMI data points from around the world, however, were not enough to significantly lift stocks solidly into winning territory, as data from the National Retail Federation showed that retail sales during the Thanksgiving weekend declined 2.7 percent from the year-ago level. While the number of shoppers did increase in the comparable time period, the average shopper bought 3.9 percent less than in the year-ago four day weekend; more on this below
Holiday Shopping Roundup
By David Urani
The Street is abuzz with the weekend's retail action and early numbers from the National Retail Federation are out. They note that 92 million people were out shopping on Black Friday, up from 89 million last year. However, that traffic came at the expense of increased competition and lower pricing among the retailers. Thus, average spending per person for the weekend (Thursday through Sunday) was down 3.9% to $407.02 from $423.55. $177.67 of that money was spent online, accounting for 43.7% of sales versus 40.7% a year ago. Separately, ComScore reports that e-commerce spending for November was $20.6 billion, up 3% from last year.
Retail stocks are going mostly negative on the day, with the XRT (SPDR S&P Retail ETF) down 0.5%. But of course there will be winners and there will be losers this holiday season and there's been a close eye on store traffic, with some possible winners being identified. Uggs are apparently the most searched-for item on the internet which has DECK going higher. Likewise, good traffic has been reported from the likes of Gap (NYSE:GPS), American Eagle (NYSE:AEO), and Lululemon (NASDAQ:LULU). Nike (NYSE:NKE) is also helping to keep the Dow alift, with sporting goods being touted as a healthy market this year and perhaps one that's not seeing as big of discounts as other retail.