It’s been a slow week in terms of data but the key release of the week, retail sales for November, finally comes out an hour before the opening bell. Ahead of the data equity futures are looking strong, gold and oil are each higher, and the dollar is weak against most currencies but gaining on the yen.
Two hours before the open, Dow futures are 43 points higher at 10,385 and S&P 500 futures are 5.75 points higher at 1,103. After plummeting earlier in the week, WTI Crude oil has been is trading 38 cents higher at $70.92 per barrel. Meantime, Spot Gold is up $8.60 to $1,139.60.
“So far, it is looking like a ‘risk on’ kind of morning, with European and most Asian stock markets in rally mode, . . . all major currencies on the up 'n up, . . .and nearly all commodities higher,” said Jennifer Lee, economist at BMO Capital Markets.
The reason for optimism comes from China, where industrial production accelerated to 19.2% year over year in October and nominal retail sales, though slower than the prior month, came in at +15.8%. Don’t expect US figures to be in the same league.
Key Events Today:
8:30 ― The Retail Sales report always gets a lot of attention and this month focus will be even greater as retailers are anxious about holiday sales. Wall Street looks for a 0.7% gain in the month following the 1.4% climb in October and the 2.3% fall in September. Rising gasoline prices should boost sales overall in the month but may leave consumers’ pockets less flush for other purchases.
“If chain store sales are any guide, November dealt a setback to other retailers, notably department stores, luxury goods retailers, and apparel stores,” said analysts at IHS Global Insight. “With job losses continuing, consumers are focused on value shopping, which is benefiting wholesale clubs, discount chains, and drug store chains.”
“November retail sales are expected to post pretty decent growth, helped mainly by an improvement in auto sales and higher gasoline prices,” said Ellen Zentner from BTMU. “In November, auto sales were reported to have increased +4.3%, reaching the highest level since October 2008 (barring the incentive-fueled months of July and August). Average retail gas prices were also up about +2% over the month.”
However, Zentner adds: “But that’s where the good news ends. Take out the help from autos and gas and retail sales are expected to register a scant +0.1% growth rate in November.”
10:00 ― Consumer Sentiment is expected to bounce back slightly after two monthly declines. The Reuters/University of Michigan index is set to advance two points to 69.5 in December.
Analysts from IHS Global Insight note an upward trajectory in recent sentiment surveys, “thanks to holiday bargains and a recovering stock market. Yet, sentiment remains at a very low level, suggesting that the recovery in consumer markets will be gradual.”
10:00 ― Like its wholesale counterpart from Wednesday, Business Inventories are expected to continue falling in October. The consensus looks for a 0.2% dip, subtracting from 0.4% drawback in September.
