Markets are little changed after a strong week

Dow fell 91, decliners over advancers better than 3-2 & NAZ was off 4.  The MLP index was up 4 to the 324s & the REIT index hardly budged, holding above 410.  Junk bond funds inched higher & Treasuries saw buying which reduced yields (more below).  Oil slid fractionally lower to 71 & gold dropped 29 to 2915.

Dow Jones Industrials

Consumers sharply curtailed their spending in Jan, indicating a potential weakening in economic growth ahead, according to a Commerce Dept report.  Retail sales slipped 0.9% for the month from an upwardly revised 0.7% gain in Dec, worse the estimate for a 0.2% decline.  The sales totals are adjusted for seasonality but not inflation for a month, in which prices rose 0.5%.  Excluding autos, prices fell 0.4%, also well off the consensus forecast for a 0.3% increase.  A “control” measure that strips out several nonessential categories & figures directly into calculations for gross domestic product fell 0.8% after an upwardly revised increase of 0.8%.  With consumer spending making up about 2/3 of all economic activity in the US, the sales numbers indicate a potential weakening in growth for the first qtr.  Receipts at sporting goods, music & book stores tumbled 4.6% on the month, while online outlets reported a 1.9% decline & motor vehicles & parts spending dropped 2.8%.  Gas stations along with food & drinking establishments both reported 0.9% increases.

Retail sales slumped 0.9% in January, down much more than expected

Treasury yields dropped as investors digested the latest inflation reading & awaited further economic data.  The 10-year Treasury yield was more than 6 basis points lower at 4.459%, while the 2-year Treasury yield was nearly 6 basis points down at 4.253%.  1 basis point equals 0.01%, & yields & prices move in opposite directions.  Yields continued to trade lower after data showed retail sales slipped 0.9% in Jan from an upwardly revised 0.7% gain in Dec, which came out worse than the estimate for a 0.2% decline.  Yesterday's producer price index, which measures wholesale prices, came in hotter than expected in Jan, rising 3.5% for the year, the Bureau of Labor Statistics reported.  Wholesale prices rose 0.4% on the month, higher than the forecast of 0.3%.  Wed's consumer price index report also came in above forecast.  Some aspects of the PPI report & the CPI report suggested a softer reading for the personal consumption expenditures price index, the Fed's preferred inflation gauge, which will be published later in the month.

Treasury yields hold steady as investors weigh the state of the U.S. economy

US business inventories fell for the first time in 9 months in Dec as strong domestic demand depleted stocks at retailers & wholesalers.  Inventories dropped 0.2%, the first decline since Mar, after gaining 0.1% in Nov, the Commerce Dept's Census Bureau said.  The forecast inventories, a key component of gross domestic product, called for being unchanged.  Inventories increased 2.0% on a year-on-year basis in Dec.  Inventories are the most volatile component of GDP.  Private inventory investment was a big drag on GDP in the 4th qtr, restricting economic growth to a 2.3% annualized rate.  The economy grew at a 3.1% pace in the Jul-Sep qtr.  Retail inventories decreased 0.4% rather than 0.3%, as estimated in an advance report published last month & they edged up 0.1% in Nov.  Motor vehicle inventories declined 1.1% instead of the previously reported 1.2%.  They dropped 0.8% in Nov.  Retail inventories excluding autos, which go into the calculation of GDP, slipped 0.1%, instead of increasing 0.2% as previously reported.  They increased 0.6% in Nov.  Wholesale inventories decreased 0.5% in Dec, while stocks at manufacturers increased 0.4%.  Business sales increased 0.8% in Dec after rising 0.6% in Nov.  At Dec's sales pace, it would take 1.35 months for businesses to clear shelves, down from 1.37 months in Nov.

US business inventories post first drop in nine months

Stocks slid broadly to cap a busy week of tariff hikes, inflation updates & retail sales data which fell short of estimates.  Retail sales booked their biggest monthly drop in a year & the report today wrapped up a week of key data, with inflation top of mind after 2 hot readings dragged on hopes for interest rate cuts.