The Associated Press reports, “Early signs of weak holiday spending send retail stocks lower as traders return from holiday.”
Early signs of softness in holiday spending sent retail stocks lower on the first day of trading after the Thanksgiving holiday.
Macy’s and Kohl’s each fell 2 percent Monday, while Target fell 1 percent, more than the rest of the market.
Health care stocks also took a tumble. Drugmakers Celgene and AbbVie each fell 3 percent.
The Dow Jones industrial average gave up 78 points, or 0.4 percent, to 17,719.
The Standard & Poor’s 500 index lost nine points, or 0.5 percent, to 2,080. The Nasdaq composite gave up 18 points, or 0.4 percent, to 5,108.
This is always reported as if these companies (Macy’s, Kohl’s, and Target) were doing fine before they were suddenly wounded by a lack of consumer spending. But in fact these companies were probably overvalued based on unrealistic expectations of consumer spending over the holiday season. At the very least “neutral” reporting should mention the possibility of that explanation and let readers decide for themselves.
This reminds me of what I wrote a few days ago:
But our economic experts can’t think of a world that doesn’t run on consumer spending–and therefore on debt. The news stories about the holiday economy are always fixated on spending. If you read about earlier economic history, usually you will read about the rise of the middle class as technology and a more efficient division of labor makes goods more affordable. But now the only source of prosperity is understood as people simply spending more. This is obviously unsustainable.
The story also mentions some health care stocks. Maybe those losses have to do with Obamacare and maybe not, but why hasn’t any financial reporter looked at the devastating cost spikes in the Affordable Care Act and investigated how they might be affecting consumer behavior over the Christmas season?
Somehow, a horrible financial burden put on the backs of the American people is not related to how much money they spend on other things.