There was more evidence yesterday that the US economy could be headed for a recession. From Bloomberg:
Sales at U.S. retailers unexpectedly dropped in December, capping the weakest year since 2002 and pushing the economy closer to a recession.
Sales fell 0.4 percent, the first retreat since June, the Commerce Department said today in Washington. Separate figures from the Labor Department showed producer prices eased at the end of a year that saw the biggest annual jump in more than a quarter century.
Markets reacted as expected.
The figures pushed stocks lower, further weakened the dollar and led to a gain in Treasury notes. The Standard and Poor's 500 Consumer Discretionary Index, which includes Target Corp., Lowe's Cos. and Tiffany & Co., dropped 2.3 percent to close at 235.62 in New York.
But markets were also reacting to the distress in the banking sector, as highlighted by the loss reported by Citigroup yesterday.
And it wasn't just US markets that reacted. As Reuters reports, European stock markets suffered too.
Banks led European shares to their lowest close in 15 months on Tuesday as Citigroup's record quarterly loss amplified concern over the probability of a U.S. recession and monthly retail sales staged a shock fall.
The broader European market witnessed its worst one-day decline since mid-August as shares in everything from financials to defensives took a beating and every major Western European index was in the red.
The FTSEurofirst 300 index of top European shares ended down 2.57 percent at 1,395.39 points, its worst close since early October 2006.
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