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Quick Take: Retail Woes Cause Selloff

NEW YORK ( TheStreet) -- While retail sales may have come in lower-than-expected on Tuesday, the market didn't seem to mind. But that may change with the sector reporting earnings, says TheStreet's Debra Borchardt and Cuttone & Company's Senior Vice President Keith Bliss.

Investors were disappointed when Macy's (M - Get Report) reported earnings on Wednesday morning, and with Wal-Mart (WMT - Get Report), Kohl's (KSS - Get Report) and other retailers scheduled for later this week, the retail sector could be headed lower.

However, department stores and teen retailer disappointments could just be the beginning, according to Bliss. He said construction supply, home improvement stores and furniture sales were all down month-over-month.

Aiding the argument was Deere & Co. (DE - Get Report), which reported earnings on Wednesday. The company posted an 11% decline from last year in its forestry division. In other words, demand for lumber, which is used for housing, was lower.

Should the strength in the housing market dwindle, then the overall economy will likely begin to slow as a result.

Bliss added that 70% of the GDP is consumer-driven, and that economists may begin to scale back growth estimates, if retailers continue to struggle.

-- Written by Bret Kenwell in Petoskey, Mich.

Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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