US retail sales collapse & global technology stocks set for fall

US retail sales collapsed by a record 3.7% in November from the previous month, the US Commerce Department announced Thursday 14th December 2001.

Retail sales had climbed a record 6.4% the previous month. Blue chip stocks fell in response to profit warnings from American Express [AXP] and Merck [MRK]. Retail sales in the UK are holding up with an increase of 7.1% in the year to November, the fastest annual growth since 1988.

In the last full trading week before the Christmas holiday, US quoted and European TMT stocks [such as Logica and Lucent] reported poor trading. Applied Materials [AMAT] announced that it was cutting 10% of its workforce in response to market downturns for chip demand.

Comverse Technology [CMVT] announced a 15% staff cut. The continuing slide in technology stocks is somewhat abated but not offset.

Profit warnings continue and poor trading amongst the major quoted multinational companies, as well as a likely potential family shareholding blocker in the Compaq / Hewlett Packard merger, make the pre-Christmas markets at best uncertain and probably weak.

'It is natural to see pullbacks of this kind' commented a US fund manager. 'It is also likely that low interest rates will begin to bite and investors will shift resources back to stocks' he added.