Stocks trim losses, but growth worries remain

After a weak retail sales report, one strategist sees a 'meaningful downshift in household spending.' Citi's earnings beat estimates. US business inventories and New York manufacturing tick higher.

By TheStreet Staff Jul 16, 2012 9:14AM
Updated at 12:41 a.m. ET

By Andrea Tse 

Stocks recovered some morning losses Monday but remained down after a worse-than-expected retail sales report stoked concerns about a stalling economy.

The Dow Jones Industrial Average ($INDU) was down 64 points at 12,713. The S&P 500 ($INX) was down 5 points at 1,351. The Nasdaq Composite ($COMPX) was down 14 points to 2,994.


The Commerce Department reported worse-than-expected U.S. retail sales for June. Sales fell 0.5%, compared with the 0.2% increase economists were expecting and after a 0.2% decline in May.

The report marks "a meaningful downshift in household spending momentum after the buoyancy seen in the past two years," said Millan Mulraine, a senior U.S. strategist at TD Securities. "The general tone of this report was disappointing, and it suggests that consumers are beginning to retrench spending in a meaningful way."


Excluding the more volatile auto sales component, retail sales fell 0.4%, compared with the flat figure that economists were expecting and after falling 0.4% in May.

At the same time, the New York Federal Reserve reported a read of 7.39 for the July Empire State Manufacturing Survey, up from 2.29 previously and better than the expected 4.

The Commerce Department reported that business inventories rose in May as auto dealers restocked to meet demand, according to Reuters. Inventories increased by 0.3% to $1.58 trillion after rising by a downwardly revised 0.3% in April. Economists had expected inventories to rise by 0.2%. Retail inventories outside of autos were up 0.6%, Reuters said.

Stocks soared Friday, snapping a long losing streak, as investors cheered in-line China gross domestic product data, a mild read on domestic inflation and a better-than-expected earnings report from JPMorgan Chase (JPM).

In corporate news Monday, Citigroup (C) reported second-quarter earnings of $2.95 billion, or 95 cents a share, on revenue of $18.64 billion. The average analyst estimate was for a profit of 89 cents a share on revenue of $18.76 billion. Excluding one-time items, the bank earned $3.08 billion, or $1 per share, in the latest quarter. Also, news surfaced over the weekend that Citigroup reportedly plans to seek permission to increase its dividend by the end of this year. The bank has had a minimal penny-per-share quarterly payout since the financial crisis.

Shares of Par Pharmaceutical (PRX) soared early Monday after the company agreed to be acquired by buyout firm TPG for $1.9 billion. The deal values Par shares at $50 each in cash, a premium of more than 35% to Friday's close at $36.58. Under the terms of the deal, Par, a Woodcliffe, N.J., maker of both generic and proprietary drugs, now enters a go-shop period that allows it to solicit a superior proposal from third parties through Aug. 24. If another offer doesn't materialize, the transaction is expected to close in 2012, subject to customary approvals and closing conditions.

Credit card companies MasterCard (MA) and Visa (V) announced an agreement late Friday to settle class-action litigation with U.S. retailers. Visa said it's paying $4.4 billion, while MasterCard said its share of the cash portion of the settlement is $790 million. Visa expects to record a $4.1 billion charge in the June-ended quarter in relation to the settlement. The agreement settles claims by retailers that credit card companies conspired to fix the fees they charge retailers and opens the door for retailers to begin charging consumers extra to use credit cards.

Chip-maker Texas Instruments (TXN) was downgraded to "underperform" from "market perform" at FBR Capital Markets as part of a larger call on semiconductor makers ahead of the second-quarter reporting season. The firm, which also dropped its 12-month price target to $24.50 from $30, said it sees "more downside risks" for Texas Instruments than for other chip stocks "trading near trough valuations."

More from TheStreet

Jul 16, 2012 9:49AM
I am laughing...  How soon before we start having failed "5 year plans"?  Government is does not belong involved in every aspect of commerce.  Governments job is to provide a level playing field, not to pick winners and losers or to compete directly against companies.

Obama is a socialist, a true believer in big government, and government solutions.  He doesn't understand the work ethic because he has never had a job.   Yet, he tries to tell others how to run their business.  

He actually thinks government should be in charge of Banks, Insurance, Education, Healthcare, Mortgages, Automotive, and many other areas of business.  He believes with all his heart that socialist, big government is better than the private sector.  When everyone in America knows that to be utter nonsense.

We need to fire Mr. Obama and as many of his Donkey minions as possible this November while we still enjoy some freedoms.  The real question is will Mr. Obama leave office peacefully after he is defeated in November...  
Jul 16, 2012 10:26AM
Theresa2u, Since Obama has been in office, the American middle class has lost 42% of their  wealth.    In another years, with "57 States" continued war on the middle class will their be anything left?

Obama has done more harm to the middle class than anyone in history.  His anti-middle class, socialist agenda has crippled the middle class.  When Obamacare kicks in, it will destory another 15-20% of the middle classes wealth.

Mr. Obama, and his socialist policies are no friend of the middle class...
Jul 16, 2012 10:22AM
Theresa2u, "57 States" is one of the laziest Presidents in a  century.  Of course he has not made many proposals anyone can support.  His budgets couldn't even get a single democrat vote in Congress, they lost 424 - 0.   That seems pretty non-partisan to me.  Of course the imbecile thinks raising taxes will help.   He rails against the W tax cuts.  Then proceeds to gut the social security tax.  The man has no work ethic, but you can expect that from someone who never had a real job.

All "57 States" seems to propose is more Spending, Borrowing, Taxing and Debasing.  He seems to believe that is the way to prosperity.   This November, like in 2010, we will FIRE another 2500+ Donkey Office holders.   The way to prosperity is to un-employ as many democrats as possible.  Only then can we return to prosperity.
Jul 16, 2012 12:14PM
Tumble, LOE,

So why doesn't Obama show his SS #, College records and such????....Really just answer the insults required!!!
Jul 16, 2012 10:27AM
NO Obuma in 2012!!!!!!!!!!!!!!!!!
Jul 16, 2012 9:53AM
Question Americans....How much interest are the banks that got bailed out, paying you on your money? I mean the banks that are now holding all the money?????
Jul 16, 2012 9:42AM
Obama the Communist can just kiss my hairy butt! Working 90 hrs a week for the first three years of my business the only thing this government and obama communist buddies contributed was sucking money out of it and burying me under tons of paperwork. This man is insane and must be thrown out of office.
Jul 16, 2012 11:40AM
This discussion board is a good example of our failed government educational system. People really don't know why we are considered to be an "exceptional" nation. We are the exception, because, unlike every other system of government that existed before, we put the power of the government in the hands of the people. Bottom-up, not top-down. We are exceptional because unlike every other system, we distrust the government and understand that human nature is corrupt, and that unless we protect ourselves (Bill of Rights) against government tyranny, we will not be FREE. Other systems try (tried) to perfect the human creature -- we understand that it is fundamentally flawed, and corrupt.  It amazes me how much people don't understand, cherish or recognize the sanctity of Liberty, Freedom and Independence -- of the individual. 
Jul 16, 2012 11:07AM
Divine Right that is the one really bad thing about "57 States" socialist agenda, look at what he has done to the poor communities, crime up sharply (Chicago has become a war zone).  Unemployment has gone from 12.7 to 14.4% and continues to get worse, not better.  The Food Stamp President has even tried to let the poor skirt the law and not have to work for their welfare checks.  His policies have hurt them far worse than any KKK Grand Wizard could have done.  

Yet, they support the punishment.   I am quite sure "57 States" will heap more misery upon them.  After almost 4 years you would think they would wise up...  Enjoy!
Jul 16, 2012 11:15AM
Dennis: Germany and China are EXPORT countries. Who do you think they are exporting to? They are exporting to economies that create wealth via Capitalism... Our economy (GDP) is built on 70% consumption... China's GDP is 30% consumption, and Germany is around 50/50. Having lived in Germany, and still having family there, I can attest they are not a bunch of happy campers!
Jul 16, 2012 9:53AM
Obama has never had a clue as to how this economy works, nor seeminlgy for a law professor, how this country ever succeeded.  All he seems to have is divisive opinions about to "take" things from other peoples labor.  And seemingly, according to polls, roughly 45-50% of the American public agrees with him, which goes directly to our need for a IQ test to vote. 
Jul 16, 2012 10:00AM
Swag - Karl Marx couldn't have said it better himself.  That speech by Obama was shockingly  reminiscent of speeches made by Mao and Castro.

Christian Egyptians are refusing to meet with Hilary because they feel the Obama administration is backing Islamist parties - gee, ya think?  This is the same administration that welcomed the Arab Spring and worked behind the scenes to make sure the Muslim Brotherhood had a spot at the table.  Also the same administration that has done nothing to garner the release of the doc in Pakistan that gave us Bin Laden on a silver platter.  At least Rand Paul is building a coalition to cut off funding if the Pakistanis don't cooperate.

The 10 yr yield down to 1.45% - so ridiculous.

Jul 16, 2012 10:18AM
Microsoft and NBC are braking up. Even Microsoft has had enough of NBC's pro - Obama liberalism.
Jul 16, 2012 11:45AM

HMMM Dogmatic.  A democrat demonizing a republican for playing by the rules two Democratic Presidents enacted into practice.  Clinton and NAFTA and Obama allowing illegals free entry into this country.  And this numbskull alledging Romney outsourced and hired illegals.  Am I the only one who sees this nonsense?

Jul 16, 2012 10:33AM

The polls are now showing a virtual tie between Obama & Romney. As a ultra conservative democrat (yes-I know that's hard for some to understand; much like basic economics) we need someone who has a deep responsibility for their fellow man as well as fiscal responsibility to our country to not to tax, spend, debase our way to prosperity. Wealth comes from people, not government.


BTW: Did you go to church Sunday Fat Cat ? you're being nice to people.

Jul 16, 2012 10:28AM

I hope I made my point clear in my previous post.  The economic and social failures

of the past 3 decades have been poor management and operations of

both the public and private sectors.  It has been a combined effort with greed and

corruption leading the way on both sides.


We need for them to pull together in the same direction, not in opposite directions.

Jul 16, 2012 10:09AM
As we wave so long to the captilistic excesses of the 70's 80's and 90's we can now welcome the socialistic dumbing down that is known as the New World Order.  The first priority will be to accept the ideology that if we are all interconnected economically we will achieve world peace. This of course is predicated on the idea we all will be so interdependent economically no one country will declare war on another. The first order of business will be to abolish economic borders.  This will result in lowering the standard of living in America and Europe as they are now seen by the majority of the world as economic terrorists for leaving so many billions behind to wallow in poverty.  So in my view this is where we stand at this moment in history.  Many of us here can now see the emergence of this world plan.  If one listens to politicans and the media such as we do now they will be but cannon fodder.  Be it a Dem or a Repub it will not matter.  It will be a long cold winter for the American spirit where a political imperative not an economic imperative determines the fate of the individual in a socialistic world.   JMHO
Jul 16, 2012 12:40PM
How long are Americans going to put up with this Obuma, so called improving economy? Not me, can't wait to vote him OUT in November!! Tired of the lies!
Jul 16, 2012 10:08AM
We need the African American community to step-up and help us defeat the Marxist ideology espoused by our potus. Throughout the decades, many Blacks, Hispanics and Whites died to prevent communism/fascism, etc, from spreading. Surely they did not die in vain. Surely they did not die so that a lighter form of Marxism could be instituted around the world and in America... We are not asking them to pick-up a gun and die. This time, all we are asking for is a VOTE.

God be with US! 
Jul 16, 2012 9:38AM
Well........ It was business men that were tired of unfair business practices and taxes that started the revolution that created the USA ......... right? Seems like Obama has it backwards.
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