Benchmarks ended in negative territory on Monday as Thanksgiving weekend sales failed to ignite bullish sentiment among investors. Retail stocks were sold heavily, thereby dragging the retail sector and the broader markets. Meanwhile, the upbeat ISM manufacturing report was ignored as investors cautiously await key labor data on Friday. The drop on Cyber Monday comes after the benchmarks notched a record eight consecutive weeks of gains last Friday.
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The Dow Jones Industrial Average (DJI) declined 0.5% to close the day at 16,008.77. The S&P 500 slipped 0.4% to finish Monday’s trading session at 1,800.90. The tech-laden Nasdaq Composite Index decreased 0.4% to end at 4,045.26. The fear-gauge CBOE Volatility Index (VIX) advanced 3.9% to settle at 14.23. Total volume on the consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 5.2 billion shares. Declining stocks outnumbered the advancers. For 70% shares that declined, 27% advanced.
Holiday shoppers were found spending nearly 3% lesser in comparison to last year’s Thanksgiving sales. The drop came despite the fact that a record number of people visited shops. According to a retail trade group, Thanksgiving weekend spending suffered its first ever decline since the group started tracking the numbers in 2006.
The National Retail Federation reported that retail sales were down 2.7% to $57.4 billion during the Thanksgiving weekend. This occurred despite a 27% jump in Thanksgiving shoppers. The report also stated that the average spend of shoppers declined 6% to $407.02, largely due to reduced prices.
The dismal sales data made investors jittery who chose to sell retail stocks. Subsequently, shares of J.C. Penney Company, Inc. (NYSE:JCP), Target Corporation (NYSE:TGT) and Coach, Inc. (NYSE:COH) dropped nearly 2% each. Urban Outfitters, Inc. (NASDAQ:URBN) slumped by nearly 4%.
The SPDR S&P Retail (ETF) (NYSEARCA:XRT) lost 0.7% and was one of the losing sectors among the S&P industry groups. Stocks such as Office Depot Inc. (NYSE:ODP), PriceSmart, Inc. (NASDAQ:PSMT), Safeway Inc. (NYSE:SWY), Amazon.com, Inc. (NASDAQ:AMZN), and Ascena Retail Group Inc. (NASDAQ:ASNA) declined 1.7%, 1.2%, 1.1%, 0.3%, and 2.0%, respectively.
The Consumer Staples SPDR (XLP) lost 0.5% and was a major loser among S&P 500 industry groups. Stocks such as The Procter & Gamble Company (NYSE:PG), The Coca-Cola Company (NYSE:KO), Philip Morris International Inc. (NYSE:PM), CVS Caremark Corporation (NYSE:CVS), and PepsiCo, Inc. (NYSE:PEP) declined 1.0%, 0.3%, 0.6%, 0.5%, and 0.9%, respectively.
ISM manufacturing index data for the month of November was published on Monday. The report provided further evidence of growth in the U.S. economy. ISM data added to expectations that The Federal Reserve may begin soon begin tapering its $85 billion bond buying program. The situation will clearer after the Fed’s policy meeting scheduled on December 18.
According to the Institute of Supply Management, the Purchasing Manager Index (PMI) for November increased to 57.3% from October’s figure of 56.4%. This is also above the consensus estimate of 55.1%. The PMI has increased in a progressive manner with November’s reading being the highest in 2013. The New Orders Index increased by 3% to 63.6%. The Production Index increased by 2% to 62.8%.The Employment Index also increased by 3.3% to 56.5% and is above October’s reading of 53.2%. This was also the highest reading since April 2012. Of the 18 manufacturing industries, 15 reported growth in November.
Separately, construction spending in October was reported to have increased by 0.8% to $908.4 billion from September’s $901.2 billion. It was also above the consensus estimate of a 0.4% gain. The U.S. Census Bureau of the Department of Commerce also reported that spending on private construction was at a seasonally adjusted annual rate of $625.7 billion, 0.5% below September’s figure of $629.0 billion. Residential construction was at $326.9 billion in October, 0.6% down from September. October month’s nonresidential construction came in at a seasonally adjusted annual rate of $298.9 billion in October, 0.5% below September’s $300.2 billion.
The energy sector was the biggest gainer among the S&P 500 industry groups on Monday. The Energy SPDR (XLE) gained 0.1%. Stocks such as Exxon Mobil Corporation (NYSE:XOM), Pioneer Natural Resources (NYSE:PXD), National-Oilwell Varco, Inc. (NYSE:NOV), Phillips 66 (NYSE:PSX), and Valero Energy Corporation (NYSE:VLO) added 0.04%, 0.2%, 0.2%, 0.5% and 2.4%, respectively.
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