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Midday Market Update

Retail Sales Disappoint Ahead of Fed Announcement

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U.S. Markets
S&P was down 0.11% while the Nasdaq was up 0.08%. The Dow might have to wait a little more to hit the 20,000-point milestone. The blue-chip stock index was at 19,894 points, down 0.08%. Overall, U.S. stocks were showing mixed signals ahead of the Federal Reserve’s interest-rate announcement. The Fed is expected to increase interest rates, which would be the second such increase since the financial crisis. The Fed uses the fund rate as a tool to limit the money supply and control inflation and other interest rates. The federal-funds rate is important to consumers because interest rates for credit cards and home equity lines of credit are tied to prime rate, which is based on the fund rate.

Retails sales rose by 0.1% in November, below the 0.3% economists expected. Retails sales are a measure of purchases made at stores, restaurants, and online. Consumers cut back on purchases of motor vehicles. Sales were down 0.5% for auto and motor vehicle dealers. Excluding them, overall sales increased by 0.2%. Sales at sporting-goods stores and department stores fell by 1% and 0.2%, respectively. Furniture store sales were up 0.7%. November retail sales data can be a crucial barometer of consumer sentiment as retailers look to benefit during the holiday season.  

Manjul Bhusal Sharma does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.