Retail sales fell by 1.3% in May from April, the Commerce Department reported this morning. Economists surveyed by Bloomberg had projected a 0.8% month over month drop. The month to month drop in retail sales was the first drop in month to month sales since February.
Retail sales still grew a very solid 23% year over year as the economy continued its recovery from the pandemic recession of 2020. According to RetailDive.com, year over year sale of clothing jumped 200%, sales of electronics and appliances climbed 75%, and sales of furniture and home goods gained 70%. Sporting goods, hobby, and bookstore sales were up 46% year over year.
With the Federal Reserve set to meet tomorrow–and with the possibility that the Fed might say something that hinted at a change in its take on inflation and the schedule for tapering the monthly purchase of $120 billion in Treasuries and mortgage-backed securities–the stock market was inclined to see the glass as half empty. On worries that the lower than expected month to month growth in retail sales might indicate that the recovery was slowing, stocks fell.
The Standard & Poor’s 500, which set a new all-time high yesterday, slid 0.20% at the close. The Dow Jones Industrial Average gave up 0.27%. The NASDAQ Composite, yesterday’s strongest performer, was off 0.71% at the close and the NASDAQ 100 dropped 0.26%. The small cap Russell 2000 index was lower by 0.26%.
The yield on the 10-year Treasury didn’t move ahead of the Fed meeting closing at yesterday’s 1.50%.