February Retail Sales Come in Below Expectations

Updated from 8:48 a.m. EST

The economic recovery is looking a little more muted after Wednesday's release of February retail sales.

Overall sales grew by 0.3% last month, against expectations of a 0.7% increase. Excluding automobiles, sales tacked on a 0.2% gain, against expectations of 0.5%. Overall sales had declined in January by 0.3% because of a lull in auto purchases after a strong fourth quarter. Excluding autos, sales gained 1.2% in January.

Early indications of strength in stocks, off some good gains on the European bourses, faded after the 8:30 a.m. report. The S&P futures were lately indicating a flat open, while the Nasdaq 100 futures suggested that tech would continue to lose ground for another day, at least at the outset.

"It's a pretty big surprise," says Mike Cloherty, bond market strategist at Credit Suisse First Boston. "All the weekly chain-store reports were suggesting strong growth in nonauto sales, and it didn't really show up."

The report is the first disappointment on the economy in some time. Recent data has consistently exceeded economists' expectations.

"The recovery hasn't been knocked off track, but it doesn't have as much steam to it as we thought," says Cloherty.