Stocks Decline on Poor Retail Sales

This morning, the government reported that retail sales fell by 0.2% last month. This is the second 0.2% monthly decline in a row.

Let’s remember that retail sales means total dollars, not number of things bought. Since inflation remains low and gas prices are falling, that tends to distort how much actual consumer activity is out there. The government also reported that wholesale prices dropped by 1% in May. That’s the biggest fall in three years.

If we knock out auto sales from the retail sales report, then sales dropped by 0.4% last month. Of the Big Three, only Ford ($F), a member of our Buy List, beat sales expectations for May. Lower gas prices are probably aiding sales at lower-end stores like Walmart ($WMT) and Target ($TGT). Next week, we’ll find out how well business is going at Bed Bath & Beyond ($BBBY) when they report earnings.

The stock market is lower at the open. One stock that’s doing well is Johnson & Johnson ($JNJ). Jeffrey Holford, an analyst at Jefferies, raised the stock to buy from hold. He raised his target price from $68 to $72.

Posted by on June 13th, 2012 at 9:46 am

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