News Flow A Net Negative This Morning And Stocks Retreat

I recently noted that I thought stocks wanted to climb, and would through the end of the year–if news let them.

Well, this morning, the news has put a big downward thumb on the scale.

First off, November retail sales grew 8.1% year over year, China’s Statistics Agency reported. That sounds fine but this is China where higher growth is always expected. Going into the report economists had expected year over year growth of 8.8%. Growth in October had been up 8.6% year over year. Industrial Production rose 5.4% in the month year over year, again lower than the expected 5.9%. Fix Asset Investment rose 5.9% year over year, which matched expectations.

Second, shares of Johnson & Johnson (JNJ) took a beating after a Reuters story ran saying that the company had known for decades that its baby powder was contaminated with asbestos. Shares of Johnson & Johnson were down 9.8% as of 12:30 p.m. New York time. The stock is the largest component of the Health Care Select Sector SPDR ETF (XLV), which was down 2.88% at 12:30 p.m. The news took down even drug stocks that had good news to report this morning. For example, Pfizer (PFE), which reported that a European regulatory panel had recommended approval for the company’s Zirabev, a cheaper biosimilar version of Roche Holding leading cancer drug Avastin, was down 1.75%.

Third, a better than feared report on retail sales for November–an increase of 0.2% for the month as projected by economists–certainly wasn’t enough to turn the tide. Even though revisions took growth in October to 1.1% from 0.8%.

As of 12:30 p.m. New York time the Standard & Poor’s 500 index was down 1.44% and the Dow Jones Industrial Average had tumbled 425 points or 1.73%. The NASDAQ Composite was lower by 1.4% and the Russell 2000 small cap index was off 0.56%.

Big sector losers, besides healthcare, included the Technology Select Sector SPDR ETF (XLK), lower by 1.77% and the Energy Select Sector SpDR ETF (XLE) down 1.84%. The Consumer Discretionary Select Sector SPDR ETF (XLY) fed 0.92%.