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Stock futures point to lower open on retail sales

Stock futures point to lower open on retail sales

A retail sales report that reminded investors of the economy's growing problems sent stock futures sharply lower Wednesday and pointed to a down day on Wall Street.
Although investors already knew that retailers had a terrible holiday season, the Commerce Department's report on December sales was an unpleasant surprise. The department said retail sales dropped 2.7 percent, more than double the 1.2 percent analysts expected.
This marks a record sixth straight month of declines as consumers pare their spending amid mounting job losses and a severe credit crisis.
The weakness in consumer spending has been a major factor in the economy's deterioration and analysts say they don't see that improving soon. Many predict the recession, already the longest in a quarter-century, will persist at least until the second half of this year.
Later today, the Commerce Department will report on business inventories, and the Federal Reserve will release its beige book, an assessment of the economy by region.
Investors are also more concerned about the financial industry after Citigroup Inc. as expected announced Tuesday it would give control of its brokerage, Smith Barney, to Morgan Stanley, and receive about $2.7 billion in much-needed cash.
The market is worried that Citi is still suffering and may need to take further steps to streamline its business.
Citi could soon shrink itself by one-third, according to a Wall Street Journal report Wednesday. The Journal says Citi is likely to announce plans next week to shed two consumer-finance units, the bank's private-label credit card business and cut back on trading it does on its own behalf.
While other financial firms don't appear to be in as dire straights as Citigroup _ which is expected to post its fifth straight quarterly loss next week _ the industry's troubles are far from over.
Analysts are fearful that banks' credit problems, which up until now had been largely concentrated in mortgages, are spreading to other portfolios, like credit cards and auto loans, setting up 2009 to be another year of multibillion dollar losses.
Wall Street will get its first taste of how the financial sector is faring Thursday, when JPMorgan Chase & Co. reports earnings nearly a week ahead of schedule.
Ahead of the market's open, the Dow Jones industrial average futures fell 133, or 1.58 percent, to 8,275. Standard & Poor's 500 index futures fell 15.20, or 1.75 percent, to 853.40, while Nasdaq 100 index futures dropped 18.25, or 1.52 percent, to 1,185.75.


Updated : 2021-07-24 10:58 GMT+08:00