There was a 150 point panic in the market yesterday morning when Macy’s and Kohl’s turned in poor reports.  So all eyes were on today’s retail report, hoping it would reveal that purchasing habits had merely shifted rather than declined.  No such luck.  The much anticipated report showed that consumer spending was indeed slowing and that the retail sector was in trouble.  This sent more shock waves to those fearing that less consumer spending will translate to slower growth.  Fortunately most of the shock was absorbed yesterday with today’s Dow sinking a very modest 22 points.  Volume was also lighter than average at 6.1 billion shares.  Today’s report does however fuel concerns that the S&P at 17.6 times earnings is overpriced and due for a drawdown.

BUSINESS NEWS | Fri May 12, 2017 | 5:16pm EDT

Wall Street falls, department stores take a drubbing

By Noel Randewich

DJ: 20,896.61  -22.81     NAS: 6,121.23  +5.27     S&P: 2,390.90  -3.54       5/12

(Reuters)  Wall Street slipped on Friday, ending the week lower as tepid economic data weighed on banks and worries deepened over Nordstrom (JWN.N) and other department stores.  Risk-averse sentiment gripped Wall Street this week after President Donald Trump unexpectedly fired his FBI chief, the potential fallout from which could delay Trump's pro-growth goals to cut taxes and boost spending on infrastructure.

Soft retail sales and monthly inflation data on Friday raised concerns about slow economic growth and questions about whether the Federal Reserve could maintain its hawkish outlook for interest rates this year.

Federal funds futures implied a 49-percent chance of two more rate hikes this year, compared with 54 percent shortly before the release of the data, CME Group's FedWatch tool showed.

Banks, which typically benefit from higher interest rates, dragged on the S&P 500 and Dow Jones Industrial Average. The S&P 500 financial sector .SPSY fell 0.45 percent, while industrials .SPLRCI were off 0.65 percent.

Department stores faced serious pressure for a second straight day after J.C. Penney (JCP.N) reported lower-than-expected comparable-store sales, sending its shares down 13.99 percent.

Nordstrom (JWN.N) dropped 10.84 percent after weak quarterly same-store sales.

Macy's (M.N) fell 3.04 percent, bringing its loss to more than 19 percent in the past two sessions following its dismal quarterly report.

The less-than-expected 0.4 percent month-over-month increase in April retail sales stirred fears about the retail sector as well as the economy.

"The numbers were light again, people don't seem to be spending money despite employment and income numbers being good. It's concerning," said Stephen Massocca, Senior Vice President at Wedbush Securities in San Francisco.

The Dow Jones Industrial Average .DJI declined 0.11 percent to end at 20,896.61 points and the S&P 500 .SPX lost 0.15 percent to 2,390.9.  The Nasdaq Composite .IXIC added 0.09 percent to 6,121.23.  For the week, the Dow fell 0.5 percent, the S&P 500 lost 0.4 percent and the Nasdaq rose 0.3 percent.

With a better-than-expected first-quarter reporting season all but complete, S&P 500 companies on average are now predicted by analysts to grow their second-quarter earnings by 8.3 percent, according to Thomson Reuters I/B/E/S.

The S&P 500 is trading at 17.6 times expected earnings, higher than its 10-year average of 14.2.

GE (GE.N) was the top percentage loser on the Dow, down 2.08 percent after Deutsche Bank downgraded its shares to "sell" from "hold".

Declining issues outnumbered advancing ones on the NYSE by a 1.32-to-1 ratio; on Nasdaq, a 1.39-to-1 ratio favored decliners.

The S&P 500 posted 28 new 52-week highs and 11 new lows; the Nasdaq Composite recorded 82 new highs and 70 new lows.

About 6.1 billion shares changed hands on U.S. exchanges, below with the daily average of 6.8 million shares over the last 20 sessions.