Ho-hum retail sales keep stocks in check

Merchants report disappointing numbers after a storm-beaten holiday season. First-time unemployment claims increase more than forecast. BP's shares rise after an oil-spill report spreads the blame.

By TheStreet Staff Jan 6, 2011 8:33AM

TheStreetWall Street © Comstock Images/agefotostockBy Melinda Peer, TheStreet

 

Updated at 12:23 p.m. ET

 

U.S. stocks are treading water Thursday as weak retail sales results for December tempered expectations that the government will report an uptick in employment on Friday.  

 

At 12:23 p.m. ET the Dow Jones Industrial Average ($INDU) was down 46.3 points, or 0.4%, to 11,676. The S&P 500 ($INX) was down 4.7 points, or 0.4%, at 1,272, and the Nasdaq ($COMPX) was ahead by 2 points to 2,704.

 

Economists expect the Labor Department's jobs report on Friday to show that U.S. employers added 150,000 jobs in December and that the unemployment rate declined to 9.7% from 9.8%, according to Briefing.com.

The Labor Department today said the number of first-time requests for jobless benefits rose by 18,000 to 409,000 during the week ended Jan. 1, up from a revised 391,000 in the previous week. Economists had expected claims to increase by 17,000, according to Briefing.com.

 

"In general, economic data continues to suggest that the economy is accelerating heading into 2011, which should provide additional support for the jobs market," said Jim Baird, partner and chief investment strategist for Plante Moran Financial Advisors.

 

December same-store sales were weaker than expected as inclement weather across the country kept many shoppers at home during key holiday sales days.


Shares of Macy's (M) were down 3% to $24.23 after the company reported a 3.9% sales gain in December, missing estimates of 4.5%. Target's (TGT) stock was falling 6.7% to $55.02 after the retailer missed forecasts for a sales boost of 4% with a 0.9% uptick. Abercrombie & Fitch (ANF) said sales rose 15%, compared with expectations for an increase of 10.9%. Shares were down 3.7% to $53.29.

 

Merck (MRK) said the Food and Drug Administration accepted its approval filing for its hepatitis C drug, whil rival Vertex Pharmaceuticals (VRTX) is still waiting to hear from the FDA regardin g a similar drug. Merck's stock was up 0.6% at $36.80 while Vertex was off by 1.1% at $36.44.

 

ARM Holdings (ARMH) saw its stock jump 1.7% to $22.28 on news that the next generation of Micrsoft's (MSFT) Windows operating system will work with ARM's "system on a chip" design. (Microsoft owns and publishes MSN Money.)

Shares of casual-dining restaurant chaing Ruby Tuesday (RT) were up 6.6% at $14.93 after it beat quarterly earnings expectations by 2 cents per share with a profit of $4.6 million, or 7 cents per share.

 

Shares of BP (BP) that trade in the U.S. were down 0.7% to $46.19 after a U.S. commission spread the blame for the Gulf of Mexico oil spill across BP's contractors and regulators, in addition to BP.

 

Sprint Nextel (S) will offer a version of Research In Motion's (RIMM) PlayBook tablet that will run on the wireless company's next-generation network. Sprint's stock was up 0.3% to $4.64.

 

Shares of Massey Energy (MEE) were down 06% at $56.05 after it said fourth-quarter coal shipments were lower than previously forecast.

 

Hong Kong's Hang Seng rose 0.1%, and Japan's Nikkei gained 1.4%, hitting an eight-month high as the yen lost value against the dollar. London's FTSE was adding 0.1%, and the DAX in Frankfurt was ahead by 1%.

 

Crude oil for February delivery was falling $1.95 to $88.35 a barrel. The February gold contract was down by 70 cents at $1,373 an ounce.

The dollar strengthened marginally against a basket of six currencies, with the dollar index up 0.4%. The benchmark 10-year Treasury note was up by 7/32, diluting the yield to 3.436%.

 

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134Comments
Jan 6, 2011 12:12PM
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America has crossed from a caring and sharing nation into it's just about me and greed.

 

Money has become the drug of choice for so many Americans life has passed them by. In the end we are remembered for who we were and not what we had.

 

If money became worthless tomorrow who do you think would survive? It would be those who put life before greed, you cant eat money.

Jan 6, 2011 11:20AM
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But I also know that you are aware that our current MIlitary/SS/Medicare/Medicaid "positions" are NOT SUSTAINABLE.  Ignoring that does not make it go away.  And unfortunately, the problem not appears to have gotten too big to just GROW OUT OF IT.  So when is going to be the right time to make the adjustments necessary to get this ship back afloat?  Again, I say, look at NJ.  Look at the deficits Christie has found a way to fix.  Sure, lots of huffin and puffin from some groups, but no European style riots or gov't shut downs.  The chickens appear to have come home to roost. 

As I've said many times: CUT DEFENSE.  3/4ths of all discretionary spending is defense: Almost $400 Billions worth.  For comparison, China is around $20 Billion and Russia $15 Billion.  Yet for some reason, not one cent of defense spending is on the table for Republicans, but programs that directly help the middle-class (and thus create economic growth) are.

 

I work in the industry, and anyone with two eyes knows a 50% cut to defense spending is needed.  Besides, if you stop with the near unlimited budgets, maybe program managers will start to be a bit more cost consious...

 

As for Christie: Christie did a LOT of magic to close Jerseys budget, a lot of it using one-time revenues.  And thats not counting the several hundred million he needs to return to the Federal government for that road construction project he shut down, because it "might" someday run overbudget.  Christie is already looking like a one-term governer.  And to be fair, $3 Billion to Jersey is nothing; I'm still trying to figure how Winsconsin achieved that same level of debt, considering it only has about 500k people to care for...

Jan 6, 2011 12:08PM
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And why shouldn't most of the wealth be in the hands of a few?

Because consumer spending would drop off a cliff, business would sell less goods, and the economy would shrink.

 

This idea has been tried in the past with bad consequences.

You mean the early 1900's-1910's and 1940's-late 1960's, and the 1990's?  You know, the periods where the economy expanded the fastest in US history?

 

Or for comparision, how about all the countries where the wealth is centrailized in the hands of a few?  Mexico is a very good example, where coorporations rake in huge profits, but the economy is in the pits because of a lack of a middle class.

 

You should be grateful to the rich, because they give you a living and pay the major portion of the taxes. And the products & services produced by their enterprise give you a high quality of life.

Wrong; they have a living because people buy their goods.  No profit is ever made until a good is sold.  No one having money to spend = no goods sold = no profit.  The economy grows from the poor and middle classes up, not the other way around.
Jan 6, 2011 12:03PM
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Money spent on defense is creating jobs. Cutting defense spending will cuts jobs, whether its soldiers in the field or people making bullets, planes or whatever. It is "not" a waste of money as some seem to think. I would rather the government spend it on defense to create jobs and protect our country than some of the other programs.

Please, STOP IT.  I work in the industry, and I see waste every single day.  Heck, I PARTICIAPTE in it! 

 

Will people lose their jobs with defense cuts?  YES!  But those that are key to reasearch, development, and production will remain.  The projects we actually need will remain active.

 

What you want to do instead is use 20% of the total budget to keep a few thousand employees with their jobs.  Does anyone else see a problem with that line of thinking?  We do not need to outspend the rest of the world combined, every year, in defense.

Jan 6, 2011 11:48AM
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Colorado just about nails it.

No one wants to admit, and deal with the fact, that the fundamentals of this system need to change before anything will get better. According to Elisabeth Warren and BLS studies, aprox. 13% of the wealthiest people in this country, have 85% of this country's' wealth, and of that, 1% control almost 24% of the wealth. The largest disparity in history and growing each year. 'Mechanically', this is what needs to be fixed, and no one seems to want to deal with it, or even admit that its broken, (Crying class warfare, or why shouldn't 'hard work' be rewarded). 

Hey! I've worked damed hard in the trades for over 30 years, as many millions of others have, actually producing 'value'. That is, turning raw materials, (wood, lumber, metals) into finished products that are useful. Only to see 85% of the wealth, or value generated by those products, go to 13% of the wealthiest people in the country.

Which leads me to ask, 'Whats the point ?'. 'Why even try ?'. 'Wheres the incentive?' The greed of a few will ruin it for the many!   

All I know is 87% of the people are trying to get by on 15% of the wealth (and decreasing), and are going nowhere!! 

One must remember, Life is short, and no matter how hard one tries, you can't take it with you!!

Primers and powder boys!

 "Will work for Ammo!"




Jan 6, 2011 11:44AM
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trouble is when you work in that industry you see that most of the projects have no future.  most of the projects will never get fielded.  most of the projects if they are fielded are such paltry in quantity they will have no military stratigic value.  the company i left 3 years ago was working ENTIRELY on products that will never get fielded.  it was a total make-work company.  be it defense or national defense, NOTHING they were doing was going anywhere.  while they were a $20 million company, THEIR products were to be "used" in higher up assemblies - which also were going nowhere.  very quickly you can see how that small company doing nothing flows into many more doing nothing.  all military "products" that were going to do nothing.  this easily reached billions of $$$ in waste spending.  ~ pork spending. 

Money spent on defense is creating jobs. Cutting defense spending will cuts jobs, whether its soldiers in the field or people making bullets, planes or whatever. It is "not" a waste of money as some seem to think. I would rather the government spend it on defense to create jobs and protect our country than some of the other programs.
Jan 6, 2011 11:32AM
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Thanks Gamer, for pretty much summarizing what is wrong with America, somewhere along the lines our gov got off track and starting trying to take care of us.  Stupid government.  Stupid stupid stupid.

Really?  Could have sworn that low taxes, catering to business, and NOT caring for its people were the cause.

 

Look at it this way: We spend 10 times as much in Defense then we do in education and healthcare, COMBINED.  So why is it that conservatives continue to defend all the waste that goes into defense?

Jan 6, 2011 11:29AM
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Interesting, now if only we could determine what happened exactly 4 years ago, hmmm, I think I read this somewhere, 4 years ago, 4 long years ago, what could possibly have happened, oh yeah...
And can you point to anything the dems did during that time that caused the housing bubble to go?  The runup and creation of the bubble all happened under the past decade of Republican leadership.
Jan 6, 2011 10:53AM
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Tea baggs are like all other politicians, you show me one that does not BS and I will show you a pig that will fly. All for corporations nothing for the little guy-small business and getting worse. None of them are going to do anything but for the corporate donors on k street that funded them getting into office. Debt, they do not care. Millions more Americans living in poverty every year with nothing but low paying jobs, they do not care. 3rd world USA they do not care. Less than 5% control 95% of United States wealth and getting smaller by the day...HAHAHAHA
Jan 7, 2011 3:13PM
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There's so much waste in all of these R&D projects coming out of the Pentagon

Yep, nothing wrong with using 1980 airplanes

1970 tanks and 1960 guns.

 

We need to reduce our population anyway. 

Jan 7, 2011 2:57PM
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I hear that 1.4 million jobs were added last year....overseas!

 

The media tried to make it sound like everyone was opening their wallets and spending for Christmas but the little guy knows better. It's amazing how dumb they think we are!

Jan 7, 2011 9:56AM
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Hmmm...

 

I wonder if Carnagie Deli in NY franchises...  I might need to open one in Ft. Worth...

 

Jan 7, 2011 9:52AM
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Igy, I'll be OK...first, I didn't even take advantage of Texas' incentives, like help securing Industrial Revenue Bonds, or help with state regulations (I don't use hazardous materials), etc...   The costs of the moves will be paid back in less than 7 months, through reduced taxes.

 

As to needing Obamacare?   LOL...  I have my own personal plan, way better than a Cadillac plan, its a Mercedes plan...  LOL

 

As to Texas, so far I cannot think of anything I miss from Chicago, excepting a good Rye Bread and Corned Beef sandwich...  and I can even get my Lou Malnatis pizza's shipped here overnight...

 

Illinois can rot in hell...

Jan 7, 2011 4:50AM
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VolckerFan, I do understand your denial my friend. You are me running my business 30 years ago in stagflation economic conditions. I destroyed 4 families without realizing what power I had over their lives for no other reason then that they pissed me off in labor dispute. It cost me a lot of money to make that one right. Inflation is bitcch for both sides of the labor table and stagflation is ultimate bitcch. Most managers don’t want to think about the repercussions of their actions. It is easier to make decisions that way without owning responsibility for the repercussion of your actions. It is a sign of the times I suppose. We are not there yet, but soon.

 

I was just trying to help you avoid a life lesson that scarred me for life. You break bread with your employees one week and the next week you are responsible for putting their kids on the street. Some lessons you have to learn the hard way I guess, but I assure you hind sight is 20/20.   

Jan 6, 2011 10:31PM
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I75 - Actually NM is 1 and gets $2 for every tax dollar collected.  Alaska gets 1.87, WV gets 1.83, MS 1.77, AL 1.71.  The states in deep debt CA .79, IL .73 and NJ .55 get some of the least dollars back for taxes paid.  Texas get .94 back for every dollar tax paid.  The gross numbers are bias by states populations.  CA, IL and NJ simply spend too much more than they tax.
Jan 6, 2011 8:24PM
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deklen

 

It would be pretty funny if they raised taxes on business, right after Mirageguy got there.  He would stroke but be too proud to take obamcare or social security diability.

Jan 6, 2011 7:48PM
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havasu

 

How come these states send more money to the fed than they get back?  Texas gets more back than they send to washington.  Texas is the welfare state.  Wish they would go back to mexico so we could balance the budget.

Jan 6, 2011 7:35PM
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TW1946 - The  FED may own CA, IL and NJ but not TX.  Tejas has a projected $7-9b deficit but has the 2nd largest economy in the US at $1.2T with 11 million employed and NO state taxes but metro large property taxes; low property taxes on ag property.  CA has a real $40b deficit and Il and NJ are right up there % wise.  These are also the post child welfare states and shirk their share of FED taxes through very large property and state tax deductions.  Perfect examples of why socialism does not work.
Jan 6, 2011 7:02PM
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VolckerFan -

 

Shareholders don't really have much control over how corporations run their business, unless they hold a very substantial portion of the shares. Cronyism is routine; CEOs sit on each others' boards and one hand washes the other. Among other things, this country needs substantial corporate reform.

Jan 6, 2011 6:24PM
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Disillusioned, if you hop on here later tonight, I read what you had to say concerning the economic duress, and like I had said before, it varies with the labor market.  If wages and static and prices getting higher, there are a few options.  Get a new job in the same industry, invest in some skills to get a job outside of the previous job class, or accept that your real wage is falling.  It's cruel, admittedly, but the reality is that when the value of a certain job class's production falls or the skills required to do that job drop, the real wage for the job should fall.

 

Concerning you statement on the productivity gains.  If productivity gains are due to capital investment, who do the productivity gains belong to?  I think I had pointed out Xplo before that if enough innovation is done to turn a job into a button pusher, the productivity increases should benefit the innovator, not the button pusher.  Again, cruel, especially in a world where technology and innovation move as quickly as they do, but that's also the reality of the situation.

 

I think that's why I favor such a strong safety net.  Not only does it help people to start their own small business since they won't be completely destitute if it goes under, but it also catches the people who have had the times pass them by.  The innovator's productivity gains are at the expense of the formerly skilled position, and therefore they should pay taxes to help ease the transition of the people they displaced.  I certainly don't think that getting 55 to 45 cents on the dollar for every dollar earned beyond a couple hundred thousand is the detriment some think it is.  If I give you a dollar, and I tell you that if you take that dollar I'm going to take 60 cents back, aren't you still going to take the dollar?

 

And people will say "But what about the time and effort it costs the innovator or owner?"  To which I respond, "Marginal tax rates."  They had a long way of paying less in taxes.  So, are you going to tell me that the earned dollar from 250K to 250,001 took a lot more effort, or is the marginal effort to earn excess income reasonably small.  I wager that it's reasonably small.

 

That being said, it is absolutely disgusting that exec compensation has been ratcheted the way it has.  Like I mentioned last night.. I really hoped that shareholders being aware of how much money was going to execs instead of being reinvested or paid to them in dividends via a non-binding vote would have pulled that back.  I didn't expect it since the voting shares by and large are institutions, but I was hopeful.

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