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Retail sales likely to provide a lift
By Mark Cotton, CBS.MarketWatch.com
Last Update: 4:27 AM ET March 6, 2004
NEW YORK (CBS.MW) -- U.S. stock traders will be looking ahead to Thursday's retail sales figures, which are widely expected to act as a catalyst for further gains, after recent same-store sales data pointed to a strong retail performance in February.
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"Thursday's retail sales will be a focus next week" said Alfred Kugel, senior investment strategist at Stein Roe Investment Counsel. "We've had some anecdotal evidence in the last couple of days on what to expect. Wal-Mart (WMT: news, chart, profile), Walgreen's (WAG: news, chart, profile) and McDonald's (MCD: news, chart, profile), three leading companies in three different segments of retail business, all said they had a great February."
"My guess is the retail sales are going to look very good and people will forget the employment report, and we could get some gains on that."
Wal-Mart same-store sales in February rose 6.2 percent over year-earlier levels, topping its forecast of 3 to 5 percent growth. Walgreen reported an 8.9 percent rise in same-stores sales for the period while McDonald's said U.S same-store sales jumped 20.1 percent.
Mike Holland, fund manager at the Holland Balance Fund, said the fact that the market did not sell off on Intel's disappointing midquarter update and Friday's weaker-than-expected job data shows that the path of least resistance still remains to the upside.
"We are long, long overdue for giving back some gains, but I think we will tread water between now and Thursday, and the retail sales could provide the excuse to move higher," Holland said.
February retail sales are expected to rise 0.6 percent from a 0.3 drop in January, according to economists polled by CBS MarketWatch. Excluding auto sales, retail sales are forecast to rise 0.5 percent, compared with a 0.9 percent gain in January.
And helping investors get a clearer picture on the state of the retail sector will be a slew of earnings during the week from the likes of Jo-Ann Stores (JAS: news, chart, profile), Ann Taylor Stores (ANN: news, chart, profile), Albertson's (ABS: news, chart, profile), Kroger (KR: news, chart, profile), Claire's Stores (CLE: news, chart, profile), Urban Outfitters (URBN: news, chart, profile) and Shoe Carnival (SCVL: news, chart, profile).
Other economic data likely to have some impact on the markets will be Friday's University of Michigan consumer sentiment index. The preliminary reading for March is expected to show a slight rise in the index to 94.7 from 94.4 in February, according to economists polled by CBS MarketWatch.
January trade figures and inventories, the producer price index for February, and current account deficit figures for the fourth quarter will also supply investors with a snapshot of the economy.
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