Retail Investors Hit The Sell Button Following Inline Data Points

U.S. retail and food services sales for February fell 0.1 percent versus consensus estimate of 0.2 percent drop. The data from Commerce Department shows that the December 2015 to January 2016 percent change was revised from up 0.2 percent to down 0.4 percent.

The recent data on retail sales may help Fed in keeping the rates unchanged on Wednesday, when it will release its latest policy statement.

"The February retail sales data were generally in line with expectations that a slightly slower pace of auto sales and falling gasoline prices would result in a decline in the topline survey," Joe Brusuelas at RSM wrote in an email to Benzinga.

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Brusuelas said he tends to discard the month-to-month movements and instead focus on the three-month average pace at an annualized rate, which showed retail sales are up 0.9 percent and ex-gasoline are up 3.1 percent, both a bit slower than anticipated to kick off 2016.

Based on this data, the economist cut down his first quarter GDP estimate to 2 percent.

Understating True Trends

Brusuelas said the monthly retail sale report almost surely understates the true trend in household spending as it does not capture the large portion of U.S. household that purchase their groceries at stores such as Wal-Mart Stores, Inc. WMT, Target Corporation TGT or Costco Wholesale Corporation COST. It also does not include service spending such as outlays on information, travel, lodging, and entertainment which remains quite strong.

"Looking forward, given the increase in gasoline prices, an early Easter holiday and the probability that outlays on home building and furniture will pick up along with residential starts should underscore slightly better overall retail sales over the next couple of months," Brusuelas added.

Meanwhile, U.S. Retail Economist/Goldman Chain Store Sales for second week in March were up 1.4 percent month-on-month and 2.7 percent from last year. Redbook said U.S. retail sales during the second week of March rose 0.6 percent month-on-month and 2.8 percent year-over-year.

The SPDR S&P Retail (ETF) XRT was trading down 1.1 percent at $45.07.