Stock prices fell and oil prices rose Friday after reports that Ukrainian forces attacked a Russian convoy in Ukraine. Fresh concern about geopolitical tensions canceled out earlier gains for stocks, which ended the day mixed after paring much of the earlier steep losses. Before the reports from Ukraine, stocks were higher on signs the economy is improving, but not too quickly. Producer prices rose 0.1% in July, slightly less than the 0.2% economists expected. Consumer confidence, however, missed expectations, according to the Thomson Reuters/University of Michigan Consumer Sentiment Index for August.
‘Consumers are afraid’
Consumers will be in focus in the coming week after the Commerce Department reported retail sales nationwide were flat for the month of July, and Walmart (WMT) and JC Penney (JCP) turned in lackluster results.
Some big-name discount retailers are slated to report quarterly results in the coming week as well. Dollar Tree (DLTR) reports on Thursday. The company just agreed to buy rival Family Dollar Stores (FDO) for $8.5 billion. The combined company would be slightly larger than Dollar General (DG), another rival some say could be a possible bidder for Family Dollar.
One analyst said Walmart's decision not to buy Family Dollar was “the first major failure” of Walmart President and Chief Executive Doug McMillon’s administration. Dollar stores, in general, have been hard hit by the economy, with their bread-and-butter customer seeing slow wage growth and cuts to food stamp programs.
Fellow discounters Target (TGT) and TJX Corporation (TJX) are also slated to report results in the week ahead, as is The Gap (GPS). The company revised its guidance higher this week after a couple of disappointing quarters.
Yahoo Finance’s Milanee Kapadia says it’s all about consumer confidence: “Consumers are still afraid to open up their wallets after a difficult winter.”
Americans not spending on housing
It's not just retailers feeling the sting of a more conservative consumer. New reports this week reveal consumers are also reluctant to spend on housing.
Mortgage borrowing is at a 14-year low. Mortgage applications are at a 6-month low and refinancing activity is at its lowest level since 2008. That lack of activity may come as a surprise considering that mortgage rates are near their lows for the year. Freddie Mac said Thursday the nationwide average for a 30-year mortgage rate fell to 4.12% from 4.14% the previous week. So far, though, those low rates are not adding up to new activity in the housing market.
“Americans are borrowing more for student loans and autos and credit cards, but not for housing,” says Yahoo Finance Editor-in-Chief Aaron Task. “We’ve had this big drop in rates... the question is: Is that going to spur more activity in the housing market? To date, it hasn’t done it.”