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BUSINESS A25
Monday 18 January 2016
US retail sales Volatility Strikes Back:
dipped in Dec.;
low gas prices Get used to it: Big drops for stocks are back again
are key factor
STAN CHOE Michael Pistillo Jr. follows stock prices at the New York Stock Exchange, Friday, Jan. 15, 2016.
JOSH BOAK AP Business Writer (AP Photo/Mark Lennihan)
AP Economics Writer NEW YORK (AP) — Yes, this
WASHINGTON (AP) — is scary. years, they are up a total “correction,” which is what the historical average.
Americans tapered off Stock prices plunged again of 60 percent, and over traders call a sustained But when looking at the
from shopping toward the Friday and are down more 10 years, they are up 79 drop of 10 percent. last five years as a whole,
end of the holiday season, than 8 percent in just two percent. It’s just that ana- It wasn’t until this past Au- the recent spurt of volatility
while lower gasoline prices weeks, an unprecedented lysts expect the volatility to gust when the S&P 500 has merely pulled the mar-
cut into overall retail sales slide for a start of a year. continue. The remarkably snapped into its first cor- ket back to “normal.” The
in December. The vicious drops feel even calm stretch from late 2011 rection in nearly four years, S&P 500 has had a 1 per-
The Commerce Depart- more unsettling because through last summer was felled by concerns about cent drop in 11 percent of
ment said this weekend they’re such a departure an anomaly. From 2012 China’s slowdown and trading days in the last five
that retail sales dipped a from the placid and strong until last summer, investors the fragility of the global years, the same as its aver-
seasonally adjusted 0.1 returns that investors had basked in a market where economy. The worries have age over the last 50 years.
percent last month to been enjoying for years. the Standard & Poor’s 500 resumed this year. The S&P The latest big drop came
$448.1 billion after having Like vacationers returning rarely had a bad day. The 500 fell back into a correc- Friday, when the S&P 500
climbed a solid 0.4 percent from a warm beach to a widely followed index fell tion, and it has already had fell as much as 3.5 percent
in November. slushy commute to work, more than 1 percent less six days where it’s lost more and at one point erased 15
The report shows consumer the shock of change is often than Los Angeles than 1 percent. months of gains.
tastes shifting toward res- making something already has rainy days, about 8 That means the S&P 500 has Besides China’s sharp eco-
taurants and online shop- painful even more so. percent of the time. Dur- had that big a drop in 22 nomic slowdown, analysts
ping. The extra savings Now investors just need to ing that span, the S&P 500 percent of the trading days see other reasons for vola-
from falling gas costs have get used to it, analysts say. also completely avoided a since Aug. 20, more than tility to continue.q
yet to fuel large spending “It was easy for many
gains in other retail cat- years,” says Bill Barker, port-
egories. Still, some econo- folio manager at Motley
mists viewed the sales data Fool Asset Management,
as a positive reflection of whose three mutual funds
the 2.9 million jobs added control about $600 million.
in 2015. “That was not an accurate
“Consumers can’t be too display of what happens in
cautious or pessimistic if the market all the time.”
they’re still spending on The painful return of big
gym equipment, paddle- price swings serves as a
boards, restaurants and reminder that investing in
a new coffee table,” said stocks can be harrowing,
Jennifer Lee, a senior especially if investors focus
economist at BMO Capital on the day-to-day moves.
Markets. “All of those new That’s not to say inves-
jobs must be helping.” tors can’t still win over the
Sales fell in December at long term. Over the past 12
clothing, electronics out- months, an investor in an
lets and general merchan- S&P 500 index fund has lost
dise stores. nearly 5 percent, includ-
Bricklin Dwyer, an econo- ing dividends. But over five
mist at the bank BNP Pa-
ribas, suggested that an US producer prices dipped 0.2% in December
unusually warm December
likely hurt clothing store MARTIN CRUTSINGER clined 1 percent. fell in December, dropping and food are excluded.
sales and encouraged AP Economics Writer Core inflation, which ex- 1.3 percent, the biggest That’s well below the Fed’s
spending on building sup- WASHINGTON (AP) — U.S. cludes volatile food and monthly decline since last 2 percent target for infla-
plies. He expects these producer prices fell slightly energy costs, edged up February. tion. It has been running
trends to reverse as the in December, reflecting a a slight 0.1 percent in De- The small 0.1 percent rise below the 2 percent level
weather has turned colder big drop in energy prices. cember. For the past 12 in core wholesale prices for more than two years.
in January. The decline capped a months, core inflation at reflected increases in such The central bank’s quarter-
The main drag on retail year in which prices at the the wholesale level is up a areas as cigarette prices, point rate hike was the first
sales remains lower prices wholesale level fell, under- scant 0.3 percent. which rose 2.1 percent, Fed rate increase in nearly
at the pump. Sales at gas scoring the continued ab- While the Federal Reserve doctors’ charges, which a decade and lifted its
stations, which aren’t ad- sence of inflationary pres- raised a key interest rate rose 1.3 percent. target for overnight bank
justed for changes in price sures. last month, many econo- Inflation at the consumer lending from near zero to a
in the government report, The Labor Department said mists say the absence of in- level has also been low this rnage of 0.25 percent to 0.5
plunged 1.1 percent in De- this weekend that its Pro- flation pressures may delay year with the Consumer percent.
cember. ducer Price Index, which future rate hikes. Price Index up just 0.5 per- But Fed officials stressed
measures inflation before For December, energy cent in the 12 months end- that the pace of the future
Gas prices have contin- it reaches consumers, prices at the wholesale ing in November. And a rate increases will be heav-
ued to fall with the start of dropped 0.2 percent in De- level dropped 3.4 percent, price gauge favored by the ily dependent on the cur-
2016. Oil is hovering around cember after a 0.3 percent the biggest decline since Fed is up just 0.4 percent for rently low level of inflation
$30 a barrel, and many an- increase in November. September when energy the 12 months through No- showing evidence of mov-
alysts expect the price to Over the past 12 months, was down 5.6 percent. vember and shows a 1.3 ing toward the Fed’s 2 per-
decline further.q producer prices have de- Wholesale food prices also percent gain when energy cent target.q
