If I had a million dollars, I'd buy you a monkey. Haven't you always wanted a monkey? -- Barenaked Ladies
The reports on November retail sales kept coming in on Thursday and there wasn't much spreading of holiday cheer, but crude oil's latest drop helped support the major averages.
Dow Jones Industrial Average
ended down about 5 points to 10,585.12 while the
lost 1 point to close at 1190.32. The
rose about 5 points, or 0.3%, to 2143.57 after trading as high as 2156.14 intraday.
The Nasdaq seems likely to make another run at its January high of 2154 -- a closely watched technical level -- on Friday after
midquarter update after the close Thursday.
The chip giant raised its revenue projection for the quarter to as much as $9.5 billion from a previous high-end of $9.2 billion. Intel shares lost 1.7% during regular hours trading on Thursday but were recently up 7% to $24.30 in after-hours trading.
After falling more than 7% on Wednesday, crude futures dropped another 5% on Thursday to $43.25 a barrel, the lowest since Sept. 10. In other markets, bond yields rose and the dollar gained amid speculation that the
is likely to raise rates aggressively in 2005, as suggested in
The Wall Street Journal
. The yield on the 10-year Treasury note rose to almost 4.40% from 4.38% on Wednesday. The dollar, which earlier had set another record low against the euro, finished slightly better at $ 1.3268.
Lower oil prices stimulate economic growth and reduce the U.S. trade deficit, in turn increasing demand for dollars and threatening fixed-income prices.
No Holiday Bubbly
gloomy results earlier this week, which some had dismissed as company-specific, data from a host of other retailers confirmed that consumers weren't being as profligate as predicted.
To start, the International Council of Shopping Centers reported that actual November chain-store sales rose only 1.7% from the same month a year ago, less than the group's prior projections and the weakest performance since August. The trade group was still predicting that December sales would increase 3.5% to 4%.
More bad news came from individual reports by retailers, including
Federated Department Stores
Shares of Limited dropped 2.7%, Gap shed 3.8% and Federated lost 0.3%. The American Stock Exchange's retailing index lost 0.2%, bolstered by a 1% gain in
and 1.6% rise in
May Department Stores
"It is quite apparent that consumer enthusiasm is not bubbling and the potential for even a mild surprise on the holiday season total is dwindling very fast," writes Pierre Ellis, an economist at Decision Economics.
It's worth mentioning that one reason for consumer stinginess is the increased cost of gasoline and heating oil over last year. But for the past two days, oil prices have dived.
Crude oil's drop helped the overall markets stay above water for most of the day, even as energy and retailing stocks fell and interest rate plays like homebuilders tanked.
In the oil patch,
lost almost 2% apiece while
dropped 3%. On the other side of the energy price equation,
was up 8% and
Putting on the Ritz
The damage in retail this holiday season hasn't been across the board. Consistent with data from the Fed's beige book survey and diverging consumer confidence readings, high-end consumers appear to be increasing spending even as lower-income consumers cut back.
"Luxury retailers outperformed discounters because well-heeled shoppers are not as affected by high energy and food prices as lower-income families
are," the shopping center council said in Thursday's press release, noting that same-store sales for high-end merchants rose 5.2% from last year.
led the parade with an 8.4% gain; its shares still lost 2.5%.
By now, the familiar litany of excuses for the weak consumer are all too familiar. Energy prices are up, tax rebates are gone, spending has exceeded income growth, interest rates are up and debt levels are at record highs.
Richard Hastings, retail analyst at Bernard Sands, had another thought. Sales of high-end electronics like digital big screen TVs and
iPods have been rising rapidly all year. Not only are many of these goods purchased outside of the traditional chain store channel, they've also been bought well before the Santa land-time frame.
"Simply put, many people are crawling down their chimneys months before Santa gets out of bed," he wrote on Thursday. "For many, the holiday started months ago. Spending is therefore going to decline as satiated consumers get ready to finish up with holiday shopping and get busy paying down their debts in early 2005."
That's consistent with the recent revision to third-quarter gross domestic product that showed consumer spending increasing at a rapid 5.1% annual clip.
After adding a high-definition television, MP3 music player, satellite radio and digital camera over the summer, what's left for consumers to buy? As the song goes, have you ever considered a monkey?
In keeping with TSC's editorial policy, Pressman doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send