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Holiday Sales, Jobs Data May Boost Stocks

Old 11-27-05, 11:49 AM
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Holiday Sales, Jobs Data May Boost Stocks

Holiday Sales, Jobs Data May Boost Stocks

Friday, November 25, 2005



NEW YORK — Stocks could take off next week as investors get their first read on the holiday shopping season.

And Friday's November jobs report may signal whether the Federal Reserve will end its rate hikes soon, analysts said.

After five straight weeks of gains, the three major U.S. stock indexes are set to extend the rally into December.

"Consumers may or may not have cut back on retail spending, given the high cost of energy," said Tim Ghriskey, chief investment officer of Solaris Asset Management.

U.S. oil futures prices have slid from a late August peak. But they're still high enough that winter heating and driving costs are a concern to consumers -- and retailers.

Investors will cope with a blizzard of U.S. economic data in the coming week. Home sales, consumer confidence, retail sales, GDP, the Federal Reserve's Beige Book, personal income and spending, the Institute for Supply Management's manufacturing index, and November jobs are on the calendar.

Any inflation signs in Friday's November employment data may cast doubt on whether the Fed will stop raising interest rates during the first quarter of 2006.

This time of year, consumer confidence and retail sales will merit special attention.

"We'll get reports starting on Monday about how today went and they're often considered indicative of the season," Ghriskey said Friday, as shoppers poured into the stores.

The Friday after Thanksgiving, called "Black Friday," is considered the start of the holiday shopping season when stores lure customers with extreme bargains. Retailers hope "Black Friday" sales will be strong enough to ensure they make a profit for the quarter and the year.

For the week, the Dow Jones industrial average rose 1.5 percent, while both the Standard & Poor's 500 Index and the Nasdaq Composite Index gained 1.6 percent.

Both the S&P 500 and the Nasdaq closed at fresh 4-1/2-year highs on Friday, while the Dow ended at its highest since March.

For November, the Dow is up 4.7 percent, while the S&P 500 is up 5.1 percent, and the Nasdaq is up 6.7 percent.

For the year to date, the Dow is up 1.4 percent, the S&P 500 is up 4.7 percent, and the Nasdaq is up 4 percent.

Wal-Mart Stores Inc. (WMT), the world's largest retailer, will report preliminary November sales data Saturday.

Weekly store sales are due Tuesday, while November chain-store sales are expected Thursday. Existing U.S. home sales are due Monday, with new home sales Tuesday.

But the Conference Board's November consumer confidence number, set for release Tuesday, may be the most eagerly awaited indicator of this holiday season.

"This is basically going to be telling us what kind of momentum we have going into the holiday season," said Anthony Chan, managing director of JP Morgan Asset Management.

Recent declines in gasoline prices and other positive economic indicators led the National Retail Federation to raise its retail sales forecast this past week to a gain of 6 percent over last year, up from an earlier forecast for a 5 percent increase.

With retailers competing to give consumers deep discounts on holiday gift items, analysts are wondering whether strong sales will be enough to make them profitable.

"To drive the 5 (percent) to 6 percent sales growth that people are estimating, it's going to come at the expense of margins and the question is: 'To what extent?"' said Peter Boockvar, equity strategist at Miller, Tabak & Co.

Looking at the luxury spending sector, jewelry retailer Tiffany & Co. Inc. (TIF) is due to report third-quarter earnings next week.

Stocks often go up in December in the time-honored year-end rally. But any sign of inflation could keep the Fed raising rates and derail the market's gains, analysts said.

"Historically, the fourth quarter is very strong ... and you take a little bit of a pause the week after Thanksgiving," Chan said. "But I think the data will be supportive enough that you'll be able to counteract those seasonal movements. I don't see any land mines out there."

The forecast calls for November U.S. non-farm payrolls, due Friday, to add 210,000 jobs, according to economists surveyed by Reuters. In October, 56,000 jobs were created.

Average hourly wages, deemed an inflation indicator, are expected to rise 0.2 percent in November, according to the Reuters poll. In October, average hourly wages gained 0.5 percent.

The Federal Reserve's Nov. 1 minutes hinted that the central bank was considering an exit strategy from the cycle of interest-rate increases that began on June 30, 2004. Its fed funds rate for overnight bank loans now stands at 4 percent.

But Jeffrey Lacker, president of the Federal Reserve Bank of Richmond and a voting member of the Fed's rate-setting committee, said it was still too early to call when the Fed's tightening campaign would end.

Any softness in Thursday's retail sales or Friday's payrolls would back the idea that the Fed will stop raising the fed funds rate when it gets to 4.5 percent, and that could push stocks higher, Boockvar said.

"The market is more sensitive now to the economic data than it's been in a long time because of this debate about the Fed being almost done," Boockvar said.
It amazes me that even with fuel prices what they are, people continue to spend.
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Old 11-27-05, 11:58 AM
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CHICAGO (Reuters) - The holiday season's first major shopping day got off to a relatively flat start compared to a strong 2004, despite special promotions, discounts and expanded hours, according to figures released Saturday.

But Wal-Mart Stores, the nation's largest retailer, said that its sales were strong the day after Thanksgiving, coming in above its own forecasts.

"With heavy discounting by non-mall retailers combined with the extended shopping season in 2005, consumers may not feel the pressure to shop early this holiday season," retail research group ShopperTrak said in a statement.

Shoppers lined up to grab early-bird specials as many stores opened before sunrise on the Friday after Thanksgiving -- known in the industry as Black Friday because it traditionally marked the date when retailers began turning a profit for the year.

Data from ShopperTrak showed Black Friday sales were down a slight 0.9 percent from a year ago to $8 billion. ShopperTrak said sales in the South were particularly good with the Midwest coming in second. Major retailers will release November results later this week.

"While Black Friday is important to retailers, it's not always the best indicator for consumer shopping patterns during the remainder of the holiday season, which should allow the retail industry to continue feeling optimistic," said Michael Niemira, chief economist and director of research for the International Council of Shopping Centers.

While it is still a big weekend for retailers, consumers are increasingly waiting until the last minute to shop, so the Saturday before Christmas has become the busiest shopping day in recent years.

As consumers grapple with steep energy prices and rising interest rates, investors are watching closely for any sign of a spending pullback.

Wal-Mart Stores Inc. Saturday reported better than expected post-Thanksgiving sales as consumers snapped up discounted computers and toys at the start of the crucial holiday shopping season.

The November-December holiday season typically accounts for about one-fourth of annual retail sales, and the biggest chunk of profits for jewelers, electronics chains and clothing stores.

"If we see (after-Thanksgiving) sales growth over 5 or 6 percent, that's a very positive indication of a good holiday season, if they can sustain it," said Darrell Rigby, head of the global retail practice for consultants Bain & Co.

For its part, Wal-Mart estimated that November sales rose 4.3 percent at its U.S. stores open at least a year, a key retail measure known as same-store sales. The figure was toward the high end of its forecast for 3 percent to 5 percent growth.

The retailer said demand for the day after Thanksgiving beat its expectations at both its namesake discount stores and the Sam's Club warehouse chain. Computers and dolls were among Wal-Mart's best sellers Friday. (Full story).

Department store operator J.C. Penney Co. Inc. said shoppers were in a spending mood Friday and spent heavily on apparel, accessories and home gift items, adding it was optimistic for the rest of the season.

"Friday was a record day for the company and clearly exceeded our expectations. We feel we have good momentum going into the holiday," said Ken Hicks, president and chief merchandising officer for J.C. Penney.

Wal-Mart this year launched its advertising campaign on Nov. 1, the earliest in company history, and slashed prices across the stores. The strategy appears to have paid off.

"We were pleased with what happened yesterday in terms of sales and think the approach that we took in being aggressive on all levels was appropriate," Wal-Mart spokeswoman Gail Lavielle said.

Indeed, customers at an Orlando, Florida, Wal-Mart were so eager to land a bargain that they tussled over low-priced laptop computers, prompting security guards to step in, television reports showed Friday.

Analysts are still waiting to see whether Wal-Mart's strong performance came at the expense of rivals.

For its part, Visa said Saturday that bargain-hungry holiday shoppers eagerly charged up their credit and debit cards on Black Friday as total U.S. spending on Visa branded cards jumped 14 percent to $3.9 billion. (Full story). Top of page
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Old 11-27-05, 12:02 PM
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My conclusion: The economy can go either up or down.
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Old 11-27-05, 02:53 PM
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If Wal-Mart says the economy is doing great, then hey, it must be.
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Old 11-27-05, 04:57 PM
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Too bad I was too busy with school work to read IBD every day. I could have made 20% gains since late October with their picks and the CANSLIM method. Too bad I'm settling for 5% gains in the last month not including my selling of call options.

Luckily I'm on my last class and there is always next year. I think I will be able to make 10% - 15% gains in energy stocks next year. Otherwise I think tech and retail may get a nice pop in the middle of next year like it did this year that I missed.
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Old 11-28-05, 06:31 AM
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More bad news for the dem leadership.
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Old 11-28-05, 07:30 AM
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even worse is that it's warm again

reminds me of X-mas season 1998 when El Nino made it warm enough to wear short sleeves in the winter. Low heating bills means more shopping.
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Old 11-28-05, 08:53 AM
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I like that our economy now equals holiday shopping.
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Old 11-28-05, 09:25 AM
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consumer spending is 2/3 of the GDP
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Old 11-30-05, 11:54 PM
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Originally Posted by TracerBullet
I like that our economy now equals holiday shopping.
So does Wal-Mart.
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Old 12-01-05, 03:50 AM
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Originally Posted by BKenn01
It amazes me that even with fuel prices what they are, people continue to spend.
It doesn't amaze me. As much as I complained, it seemed like the increase was only going to cost an additional $500 a year of so. It was just an expense we weren't use to. However, I would guess that natural gas and electrical prices will start to have an affect. But the big bills didn't come in yet.
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Old 12-01-05, 08:41 AM
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So as I see it, our economy now works like this:

Real estate agents go to Wal-Mart and buy things, and Wal-Mart workers buy houses from the real estate agents. I think Disneyworld must be in there somewhere, too.
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Old 12-01-05, 08:46 AM
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Do we have a financial forum?
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Old 12-01-05, 05:13 PM
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Originally Posted by BKenn01
It amazes me that even with fuel prices what they are, people continue to spend.
<img src=http://www.oilnergy.com/hpix/1onymext.gif>

Hm... seems to me that fuel is falling.
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Old 12-01-05, 05:43 PM
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Originally Posted by ChiTownAbs, Inc
<img src=http://www.oilnergy.com/hpix/1onymext.gif>

Hm... seems to me that fuel is falling.


Yeah, I was at that as well.
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Old 12-01-05, 05:47 PM
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Originally Posted by ChiTownAbs, Inc
<img src=http://www.oilnergy.com/hpix/1onymext.gif>

Hm... seems to me that fuel is falling.
Depends on your perspective.

How about from last Thanksgiving/Christmas season?



And then there's gasoline, which is really what people buy...

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Old 12-02-05, 07:36 AM
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one sign of a healthy economy

a few years ago if you told someone of a job opening, you get a ton of responses. Today my company is trying to find a replacement for me and asking friends and family yields 0 people interested for an IT job.
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Old 12-02-05, 08:07 AM
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Originally Posted by al_bundy
one sign of a healthy economy

a few years ago if you told someone of a job opening, you get a ton of responses. Today my company is trying to find a replacement for me and asking friends and family yields 0 people interested for an IT job.
I agree with you. Specifically for IT, I think it has settled into the pay scale that it should have been at all the time and since you can't walk in off the street and make 6 figures like they were doing in the dot bomb era, you have more people who are devoted to the field and not just looking to make a quick buck, therefore you have a smaller pool of candidates for jobs.

Interesting link about the gas prices X. Where are all the articles touting the lower gas prices these days? I saw a gas station near my house that had 87 for $1.98. I was pleasantly surprised.

edit - It still sucks compared to a couple of years ago, but considering how horrible it was over the summer, you have to settle for small miracles.

Last edited by VinVega; 12-02-05 at 08:10 AM.
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Old 12-02-05, 08:10 AM
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All you Repubs click on to Fox News web page. It's good breaking news for you.
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Old 12-02-05, 08:18 AM
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Originally Posted by ChiTownAbs, Inc
<img src=http://www.oilnergy.com/hpix/1onymext.gif>

Hm... seems to me that fuel is falling.
Or maybe not.

<img src = "http://www.oilnergy.com/hpix/1onymex6.gif"></img>
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Old 12-02-05, 10:37 AM
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Originally Posted by al_bundy
even worse is that it's warm again

reminds me of X-mas season 1998 when El Nino made it warm enough to wear short sleeves in the winter. Low heating bills means more shopping.
Maybe I don't understand how American brains function but over here, warm = less shopping, cold + snow = more shopping. Shopping during the holidays is mostly about being in the proper mindset, and has very little to do with pure mathematics.
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Old 12-02-05, 10:39 AM
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Originally Posted by eXcentris
Maybe I don't understand how American brains function but over here, warm = less shopping, cold + snow = more shopping. Shopping during the holidays is mostly about being in the proper mindset, and has very little to do with pure mathematics.
Most Americans don't really like the cold, especially when they have to go out in it. I guess this is an alien concept to a Canadian.

Also, colder weather means higher heating bills, which means less money left over to buy gifts. At least that's the way my penny-pinching wife looks at it.
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Old 12-02-05, 10:45 AM
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Originally Posted by wendersfan
Most Americans don't really like the cold, especially when they have to go out in it. I guess this is an alien concept to a Canadian.
Here's how we think. Warm enough for shorts and t-shirts? Why the heck would I want to be cooped up in a shopping mall? Cold, and snow? Them shopping malls are warm and cozy.
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Old 12-02-05, 11:21 AM
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warm = means people buy less warm clothing that retailers stock up for in the winter

early cold snap = people rush to the stores to buy cold winter clothing and retailers make bank marking it up

cold = bad since natural gas prices are high and heating bills will eat into spending

Really it depends on where the stock market is. If it's low, then it wall street will find a reason to bid stocks up. If it's in a rally, then it might be an excuse for a pullback
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Old 12-02-05, 11:56 AM
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Heating bills don't really factor in here. Because it's so damn cold in winter, most people I know, in order to avoid huges differences between summer and winter bills, are on an equal payments plan.
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