Yahoo Finance Retail crushed — What you need to know in markets on Thursday
We’re just one day away from jobs day.
The week’s big economic event — the December jobs report due out Friday morning — is drawing closer, and ahead of this we’ll get two pieces of labor market data.
At 8:15 a.m. ET, the latest private payrolls report from ADP will cross the tape. Economists expect private payroll growth in December to hit 175,000, down from November’s 216,000 print. At 8:30 a.m. ET we’ll get the latest report on initial jobless claims, which economists expect totaled 260,000 last week.
Also in economic data, we’ll get two readings on activity in the services sector of the economy. First, at 9:45 a.m. ET, Markit Economics will release its final reading on services activity for December, and economists expect this reading to hit 53.4. Then at 10:00 a.m. ET the Institute for Supply Management will release its non-manufacturing activity gauge, which should hit 56.8.
Retail nightmare
Heads up: After the market close on Wednesday, we got two pieces of brutal retail news.
First, Kohl’s (KSS) announced that same-store sales in the important Holiday months of November and December were down 2.1% compared to the prior year.
“Sales were volatile throughout the holiday season. Strong sales on Black Friday and during the week before Christmas were offset by softness in early November and December,” Kohl’s CEO Kevin Mansell said in a release. Shares of the retailer were down as much as 14% in after hours trading.
Macy’s (M) also announced a same-store sales (plus licensed business) decline of 2.1% during November and December. On an owned basis, the company’s sales were down 2.7% during these months. “While our sales trend is consistent with the lower end of our guidance, we had anticipated sales would be stronger. We believe that our performance during the holiday season reflects the broader challenges facing much of the retail industry,” said Macy’s CEO Terry Lundgren in a release.
But the bigger news came with the company announcing it would close 68 stores, including what the AP called “landmark” location in Minneapolis, as well as laying off 6,200 employees. Macy’s said this would save the company $550 million annually starting this year.
In a separate statement, Lundgren said, “While we are pleased with the strong performance of our highly developed online business, as well as the progress we have made on selling and visual presentation programs and expense reduction initiatives in 2016, we continue to experience declining traffic in our stores where the majority of our business is still transacted. Given the overall trends challenging us and the broader retail industry, and the time needed to execute new strategies, we expect our 2017 change in comparable sales to be relatively consistent with our November/December sales trend.”
Macy’s shares were down 9% in after hours trade.
And a quick bonus item on the retail front, Reuters reported late Wednesday that Amazon (AMZN) is among the companies exploring a bid for bankrupt retailer American Apparel. Gildan has already made a $66 million stalking horse bid for the company, and Forever 21 is also reportedly eyeing a bid for American Apparel.
Sentiment
We wrote earlier today that sentiment in markets can be a funny thing.
Spend too long staring at the tape waiting for the Dow to crack 20,000 and maybe you stop believing we’ll ever cross that barrier. But according to the latest survey of markets newsletter writers from Investors Intelligence, sentiment among these folks is at its highest level since July 2014.
According to Bespoke Investment Group, the latest reading of 60.2% is just eighth weekly reading of the current bull market above 60%. Most of these occurrences were grouped into the first half of 2014, which followed the 23% gain the S&P 500 enjoyed in 2013 and more or less ushered in the two-year-long trading range we only recently broke out of.
“While these periods did not occur right ahead of a market peak, they certainly came at the later stages of a steady rally and were followed by periods of increased volatility,” Bespoke writes.
“After the occurrences in the first half of 2014, the S&P 500 sold off in October on Ebola fears, and then in May of 2015, the S&P 500 began its multi-month period of consolidation.
Data from Bespoke also show that in the month following readings over 60%, the S&P 500 has, on average, fallen about 0.5%. Over the next year months, the benchmark index is up, on average 6.5% while the median performance is a return of 12.2%.
The reason for this spread?
Readings above 60% among newsletter writers came before a 18% drawdown in 2001 and a brutal 37% decline in 2008.
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Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland
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