Your Thursday Market Blip 1/7/16

Your Thursday Market Blip 1/7/16

Stocks continued to trade under pressure as the Dow fell 392 to 16,514 on heavy trade. US stocks fell because fears of a China slowdown sparked a global selloff which might threaten the tepid US GDP growth rates. Some analyst’s now feel that weakness in China and the US oil patch can no longer be separated out from the general economy which is benefitting from job growth and a growing service sector. It’s a tug-o-war and right now Darth Vader is winning.
Macy’s Dept. store today announced it was closing 40 underperforming stores after weak holiday sales. The Cincinnati based retailer, which has about 770 stores, said the move will boost the bottom line and reiterated the need to have the right stores in the right places. About 1,500 people will be getting severance packages. Shares of Macy’s were higher on the news even in a down market as were other retailers like Nordstroms and Zumiez.
While margin compression appears to be an issue that businesses will be dealing with this year one sector that might experience margin expansion are the banks. As the Federal Reserve looks to possibly raise interest rates again later this year more bank reserves will begin to earn interest plus several banks have already raised their prime lending rates. These factors could add to cash flow and provide at least one sector with margin expansion. Some community banks were higher today even in the face of the correction.
The December jobs report will come out tomorrow and all eyes will be watching to see if a strong number can lend support to US markets.