Tuesday, November 28, 2006
Bad day at the boards
Bad day at the boards
Today was just a bad day all around with all major indices erasing part of their latest gains. The DJIA dropped 1.29 percent while the S&P500 and NASDAQ lost 1.36 and 2.21 respectively.
These losses aren’t very crucial to the markets because it follows weeks of strong rallying in the markets. Historically, the fourth quarter is when the markets do best because of strong economic numbers coming from increased holiday spending. This is the time of the year where most retailers begin to make a profit, companies like Toys R Us and KB toys especially.
Black Friday, the day after Thanksgiving in the US is the largest day of the year for retailers. I myself participated in the madness resulting from some of the largest sale prices each year.
It is no wonder retailers put up such extreme sales numbers when stores have lines forming at 4am to enter the store at 5am. The holiday rush is absolutely incredible.
Numbers from retailers have so far been less than awesome. I would not buy any retailing stocks just for a temporary boost from the upcoming holiday season. Holiday sales do have high impact on sales numbers but generally cause little rise in the stock of retailing companies. Poor sales numbers however, will lead to decreased stock prices. If retailers don’t make estimates, I would reason that their share prices will suffer, probably in the 10-15% range.
In the markets it is expected that you make numbers and there are consequences if they aren’t met but little compensation when paralleled.