Consumers appear to be pulling back on holiday spending, and that's causing worry in the stock market.
Weaker results hit the retail sector on Monday, pulling broader markets into the red to close out the session and the month.
The S&P 500 was down 0.46%, the Dow Jones Industrial Average declined 0.44%, and the Nasdaq fell 0.37%. The S&P 500 was up just 0.1% for the month, while the Dow and Nasdaq closed out November with gains of 0.37% and 1.1%, respectively.
Cyber Monday, a sales event limited to online shopping, was expected to have lured nearly 5% fewer shoppers than a year earlier, according to National Retail Federation estimates.
On top of that, ShopperTrak said sales at retail stores on Black Friday this year totaled $10.4 billion, down 10.3% from 2014, while sales on Thanksgiving Day declined 10% to $1.8 billion.
Weakening sales demand is an ominous sign for retailers heading into the all-important holiday shopping season.
"I have a hard time seeing how this funk is going to get shaken off," James Abate, CIO of Centre Funds, told TheStreet. "There's still lingering confidence issues that have emanated from the attacks in Paris, the lockdown in Brussels, what's happening in the Middle East... Although not directly related, these things can have an impact on people's confidence and also their desire to be in an open environment."
Business activity in the Chicago area fell sharply in November, according to the latest Chicago PMI reading. A sharp decline in new orders weighed heavily on the index. Separately, pending home sales in the U.S. came in weaker than expected as high prices and lower inventory kept home buyers from making the move to buy.
Some argued that the two pieces of weak data out Monday would only have a transitory impact on trading as investors look toward bigger news out later in the week, including a European Central Bank meeting on Thursday and November's jobs report on Friday.
"While the U.S. economic calendar is saturated with meaningful data today, the data will most likely only have a passing impact as traders keep an eye on the flashier headliners," said Christopher Vecchio, currency analyst at DailyFX. "There's little incentive for market participants to stake out large positions before the week is through."
The November jobs report, due Friday, is the key release of the week and the most important piece of data between now and when the Federal Reserve meets on Dec. 15. Economists expect 185,000 jobs to have been added to U.S. nonfarm payrolls over the past month.
A stronger number will do little to alter expectations about the Fed, with the chances of a rate hike in December currently at more than 70%. But if the November jobs report turns out to be a dud, the Fed's thinking will be anyone's guess.
The central bank has strongly suggested in recent weeks that a hike will come sooner than later, even if it continues to depend upon economic data. Fed Chair Janet Yellen will speak on Wednesday and Thursday and is expected to reiterate the Fed's previous party line that the economy continues to prove and warrants a move off of crises-level rates.