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Were December retail sales really that bad?

A weak morning got even weaker after 8:30 a.m. ET when December retail sales came in down 0.9 percent, well below consensus estimates of a 0.2-percent drop. It was the largest monthly decline since January 2014.

S&P futures immediately dropped about 10 points, an unusually large move since the retail sales retail typically does not have that kind of market impact.

Read More US retail sales weak, cast a cloud on consumer spending

How bad did the market take it? The euro, sitting at a 9-year low, rallied against the dollar.

Why the big drop in stocks? The U.S. consumer is the global engine of growth, so any signs of a slowdown are not going to be well received by the stock market.

But hold on. Much of the drop—not surprisingly—was due to a decline in gas station sales, which were down 6.5 percent from November, the largest month-over-month decline since December 2008, and 14.2 percent from a year earlier.

Spending was up at restaurants, grocery stores, and furniture stores. General merchandising, electronics, and internet sales seem a bit weaker than expected, and my bet is that is what spooked the market. Perhaps the consumer simply saved the money.

Read MoreHoliday sales increase 4 percent: NRF

Annual retail sales for 2014 were up 4 percent, the smallest annual increase since 2009, but still well ahead of inflation.

My sense is that this does not necessarily reflect the broader strength of the economy. I still see declining gas prices, improving job growth, and relatively strong consumer confidence.

Elsewhere:

The European Court of Justice's Advocate General said the European Central Bank's Outright Monetary Transactions (OMT) was compatible with European Union law.

The OMT, while never used, would have allowed the ECB to buy sovereign debt on the secondary market. This removes a big hurdle for the ECB. It is meeting next Thursday and may institute an aggressive stimulus package.

Read MoreECB QE needs to buy shares as well as bonds: Generali

Unfortunately, this important ruling had little impact on European stocks, which are mostly in the red, as the focus remains on declining commodity stocks.

  • Bob Pisani

    A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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