PPI and Retail Sales Disappoint, Weigh on Markets

On today's economic news, the Dow is having a weak open and is poised to close below the 11000 marker for the first time since July 2006. The Producer Price Index rose for the sixth straight month and was up 1.8% for the month, its highest level since November. Core PPI (ex food and energy) was up a more manageable 0.2%. Looking back over time (see chart), the last time we had PPI levels this high over an extended period of time was during the recession of the mid 1970's (recessions are depicted in gray).

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Adding to the concerns, are weak retail sales, up only 0.1% for the month as auto sales slumped. Excluding motor vehicles, retail sales were up 1% in June, led by gasoline sales. Here are retail sales changes by category:

  • Motor Vehicles & Parts down 3.3%
  • Furniture & Home Furnishings down 1.4%
  • Electronics down .6%
  • Building Materials & Garden Equipment down 0.9%
  • Food and Beverage up 0.7%
  • Healthcare up 0.6%
  • Gasoline Stations up 4.6%
  • Clothing and Accessories up 0.6%
  • Sporting Goods, Hobbies, Book and Music up 0.7%
  • General Merchandise up 0.4%

All eyes will be on Chairman Bernanke's testimony this morning for an indication on the Fed's next move. Leading the Dow to the downside this morning are Financials: AIG , Citigroup, Bank of America, JP Morgan and American Express.