Originally Published: January 12, 2019 4:50 p.m.
US stocks drift in a quiet close to another winning week
NEW YORK (AP) — U.S. stock indexes nestled a hair lower on Friday after the falling price of oil weighed on energy companies, but the S&P 500 nevertheless closed out its third straight winning week following a brutal stretch in December.
It was a day full of broken streaks — oil fell for the first time in two weeks, and the yield on the 10-year Treasury note sank to its first loss in more than a week — but the market remained calm through it. Gradual moves for markets in recent days have offered a respite following the tumultuous trading that rocked investors in late 2018.
“After some of the initial gains we saw earlier in the week I think it’s just a rally looking tired,” said Willie Delwiche, investment strategist at Baird. “I think it’s probably not much more than a chance for people to digest the move and try to get a sense of whether we’ve had a bounce — and this is it — or maybe a pause as we continue to move higher.”
The S&P 500 edged down by 0.38 points, or less than 0.1 percent, to 2,596.26. Last month, a typical day for the index was a swing 10 times that.
The Dow Jones Industrial Average dipped 5.97 points, or less than 0.1 percent, to 23,995.95. The Nasdaq composite lost 14.59, or 0.2 percent, to 6,971.48, and the Russell 2000 index of smaller stocks ticked up by 1.95, or 0.1 percent, to 1,447.38.
It was the first loss for the S&P 500 in six days, and much of the reason for it was the falling price of oil. Benchmark U.S. crude lost 1.9 percent to settle at $51.59 per barrel, and Brent crude, the international standard, sank 1.9 percent to $60.48 a barrel.
That helped pull energy stock in the S&P 500 down 0.6 percent, the largest loss among the 11 sectors that make up the index. ConocoPhillips, Marathon Oil and Hess all fell more than 1 percent.
Big gains earlier in the week meant the S&P 500 was still hanging onto a 2.5 percent rise for the last five days. The three-week winning streak for the S&P 500 is its longest since August. Not only that, the last three weeks of gains have all been of more than 1.8 percent. The last time that happened was in 2001.
Class-action lawsuit filed over Marriott data breach
GREENBELT, Md. (AP) — A group of class-action law firms has filed the largest-to-date lawsuit related to hotel chain Marriott’s data breach.
The Daily Record reports that Marriott International Inc. is being sued by 176 plaintiffs from all 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands in federal court. The world’s largest hotel chain confirmed late last year that hackers compiled stolen data from reservation systems used by Starwood Hotels and Resorts Worldwide Inc. for four years.
Marriott said last week that around 383 million guests were affected.
The plaintiffs assert Starwood and Marriott failed to identify the breach and notify those affected in a timely manner. Plaintiffs’ attorneys say Marriott should have discovered the breach during its acquisition of Starwood in 2016.
The report didn’t include a response from Marriott.
Ex-Nissan chairman indicted for alleged breach of trust
TOKYO (AP) — Nissan’s ex-chairman Carlos Ghosn was charged Friday with breach of trust, according to the Tokyo District Court, making the star executive’s release unlikely for months to come.
Ghosn, arrested Nov. 19, was earlier charged with falsifying financial reports in underreporting his income by about 5 billion yen ($44 million) over five years through 2015.
Ghosn; Greg Kelly, another Nissan executive; and Nissan as a legal entity also were charged Friday with additional underreporting of income, from 2015 through mid-2018.
Ghosn’s lawyer Motonari Ohtsuru filed a request that Ghosn be released on bail. His detention period for the breach of trust allegations would have expired Friday if charges had not been filed.
Kelly and Nissan were not charged with breach of trust. Those allegations center on Ghosn’s handling of investment losses and payments made to a Saudi businessman.
Ghosn, 64, says he’s innocent.
Suspects in Japan are routinely held for months until trials start, and Tokyo prosecutors maintain that Ghosn, a Brazilian-born Frenchman of Lebanese ancestry, is a flight risk.
Cheaper gas sends US consumer prices down 0.1 percent
WASHINGTON (AP) — Consumer prices slipped 0.1 percent last month, pulled down by sharply lower gas prices and cheaper air fares, used cars, and mobile phone plans.
The consumer price index rose just 1.9 percent in December from a year earlier, the Labor Department said Friday, the first time it has fallen below 2 percent since August 2017.
Excluding the volatile energy and food categories, core prices rose 0.2 percent for the third month in a row. They rose 2.2 percent from a year ago for the second straight month.
The figures suggest that the healthy economy is not yet creating widespread inflation pressures. That gives the Federal Reserve more leeway in deciding whether to raise short-term interest rates. Fed Chair Jerome Powell has said the Fed can be “patient” regarding rate hikes this year.
Charles Evans, president of the Fed’s Chicago regional bank, said that mild inflation data allows the Fed to “wait and carefully take stock of the incoming data and other developments” before deciding on future rate hikes.
Fed policymakers lifted short-term rates four times last year and have forecast two more hikes this year. Yet investors and some analysts think that slower U.S. and global growth this year, combined with low inflation, will keep the Fed from raising rates at all.
Gas prices plunged 7.5 percent in December, the most in almost three years. They have since fallen further: Gas prices averaged $2.24 a gallon nationwide on Friday, according to AAA, down from $2.41 a month ago. That reflects a steep drop in oil prices, which have tumbled partly over fears of weakness in the global economy.
Food costs rose 0.4 percent last month, the biggest increase in 4 ½ years. Fruit and vegetable prices jumped 1.7 percent while the cost of eating out rose 0.4 percent.
The cost of many goods was unchanged in December: Prices for clothes, shoes, and new cars were flat.
Strong economy does little to lift department store sales
NEW YORK (AP) — It was supposed to be a great holiday shopping season. Many investors had expected department stores to enjoy robust sales in light of a U.S. economy buoyed by low unemployment, higher wages, strong consumer confidence and cheap gas.
So when Macy’s and Kohl’s reported lackluster numbers on Thursday, they were taken aback, sending retail stocks into a tailspin and calling into question whether such mall-based chains can compete in a changing landscape where shoppers are shifting more of their spending online.
Macy’s saw only a slight increase of 1.1 percent in sales during November-December at stores opened at least year. And while sales were strong during Black Friday and Cyber Monday, the company said sales fell off noticeably until Christmas.
Meanwhile, Kohl’s reported a small sales growth that showed a dramatic slowdown from a year ago. Comparable sales rose 1.2 percent, versus 6.9 percent in the previous year.
Shares of Macy’s plummeted nearly 18 percent Thursday, suffering its worst one-day decline. Kohl’s stock closed down nearly 5 percent. Even Target’s stock took a hit, falling nearly 3 percent despite showing strong holiday sales.
Earlier this week, J.C. Penney, one of the stragglers in the department store sector, reported a drop in comparable store sales of 3.5 percent for November and December. But because Macy’s is considered a barometer of spending, particularly for the middle class and for mall spending, investors may be looking for deeper meaning in its performance.
“Macy’s report spooked investors because investors expected it to be a great holiday season across the board,” said Neil Saunders, managing director at GlobalData Retail, a retail research firm. “Now, they’re questioning how good the holiday season was. There is a lot of uncertainty out there.”
Adding to the uncertainty is that investors will not be getting December’s monthly retail sales data next week from the Commerce Department if the government shutdown is still in effect, as most observers expect. Saunders said investors are also worried that a recovery among traditional stores like Macy’s is losing momentum, raising concerns that they might have to ramp up investments even more to increase sales.
Analysts say factors like a shift to online spending and consumer preferences for so-called experiences like spas and restaurants have hurt impulse spending that likely put a dent in December’s figures for Macy’s and Kohl’s.
Online sellers are relentlessly growing their share of retail sales. In November, e-commerce and catalog sales jumped 10.8 percent from a year earlier, according to Commerce Department data, more than double the overall sales increase of 4.2 percent. Department store sales slipped 0.2 percent during the same period.