Wall Street Shrugs Off Lower Jobless Claims, Producer Prices and Increased Retail Sales

The economic data plate is full on Thursday with a litany of potentially market moving information coming from Washington.

The Labor Department reported that first-time applications for unemployment benefits dropped by 29,000 to a seasonally adjusted 343,000 for the week ended December 8, marking the second lowest level of 2012.  The latest figure far outpaced economists’ expectations of a reading of 370,000.  Claims for two weeks ago were upwardly revised from 370,000 to 372,000.  The latest move effectively wipes-out the effects of Hurricane Sandy spiking claims figures in November.  The four-week moving average, regarded as a better gauge of the labor market because it helps eliminate volatility, fell to 381,500 from 408,500.  So-called continuing claims, the number of people already receiving benefits, were lower by 23,000 at 3.2 million.

Lower gas prices pushed wholesale prices lower in November, the second straight monthly decline, according to the Labor Department.  The Producer Price Index, which clocks the cost of goods before reaching the consumer, slipped 0.8 percent, the sharpest drop since May, following a 0.2 percent drop in October.  Economists were predicting a 0.5 percent decrease.  Helping to offset the 4.6% drop in the energy index (the biggest drop since March 2009) was the cost of foods, which 1.3% climb marked the biggest increase in almost two years, led by a 12% surge in the cost of vegetables.  Stripping-out the volatile food and energy indices, “core” wholesale prices rose by 0.1 percent during November and 2.2 percent in the past 12 months.

Retail sales figures showed that Americans headed back to stores in November after a lull in October.  The Commerce Department said that retail sales rose 0.3 percent in November, following a 0.3 percent contraction the month prior.  Gas station sales had their sharpest decline in four years with a drop of 4.0%.  Excluding gas, retail sales increased 0.8 percent in November.  The destruction of Hurricane Sandy was attributed to a 1.6% jump in sales at home improvement stores.  While people were paying less at the pump, they were spending more buying cars.  Auto sales increased 1.4 percent.  Electronics and appliance retailers experienced 2.5% higher sales.  Virtually all segments saw rising sales for November.  Exceptions included gas (as mentioned), general stores and department stores, with declines of about 1 percent each.

Investors apparently aren’t impressed with inflation being kept in check as signaled through the lower Producer Price Index, shrinking unemployment claims and consumers opening their wallets.  The markets are mixed in early morning trading, but essentially flat with the Nasdaq being the biggest gainer with a tepid 6 point climb so far on Thursday as the Dow and S&P 500 flutter just above and below the zero line.  Looks like the fiscal cliff is remaining the focus.  Speaker of the House John Boehner will be back behind the podium later this morning.