- Dow Jones Industrial Average down 0.1%
- S&P 500 falls by 0.27%
- Nasdaq up 0.09%
The Dow Jones Industrial Average traded lower yesterday after earlier gains linked to trade talks progress between Washington and Beijing. The drop is being attributed to the release of U.S. retail sales figures for December that saw the biggest drop since September 2009.
The Commerce Department said that retail sales dropped by 1.2% in December last year; analysts had predicted that the figures would show an increase of 0.2%.
Consumer spending makes up around two-thirds of GDP growth in the U.S. Although the 35-day government shutdown undoubtedly had an impact on the month’s figures, they are still being seen as an indication of weakness in the country’s economic health.
Some observers were shocked, as Pantheon Economics’ Ian Shepherdson explained: “These numbers are astonishing, and impossible to square with the Redbook chain store sales survey, which reported surging sales in December and a record high in the week of Christmas, on the back of the plunge in gasoline prices.”
“These data are so wild that we have to expect hefty upward revisions, but if they stand, they are very unlikely to be representative of the trend over the next few months,” added Shepherdson. “The consumer is no longer enjoying tax cuts or falling gas prices, but that’s no reason to expect a rollover.”
Most of the markets reacted with drops, as the Dow Jones Industrial Average dropped 0.41% to 25,439, the S&P 500 fell by 0.27%, but the Nasdaq rose 0.09%.
Previously, potentially positive news regarding trade talks between the U.S. and China had given investors renewed confidence. U.S. Treasury Secretary Steven Mnuchin said he was “looking forward to discussions” on Thursday when he spoke to reporters in Beijing ahead of meetings with China’s Vice Premier Liu He.