Dec. 02 - Summary: Stocks slide as weak Black Friday sales offset strong manufacturing data, leading some to question if stock prices are too expensive relative to the economy. Conway G. Gittens reports.
Investors returned from the Thanksgiving holiday full and not willing to pile any more stocks on their plates. Wall Street closed near the lows of the day, with blue chips the biggest percentage loser. But there remains a debate as to whether the market is too expensive with stocks heading for double-digit gains this year. Ben Inker, co-head of asset allocation at GMO, says he's finding it hard to find things to buy. SOUNDBITE: BEN INKER, CO-HEAD OF ASSET ALLOCATION, GMO (ENGLISH) SAYING: "We think the U.S. stock market is quite substantially overvalued. We don't think you are getting paid much at all for taking equity risk in most U.S. stocks. We see that particularly in the small cap stock side where a lot of the stocks are trading at levels even more expensive than they did in 2000." More consumers flocked to the shops this year during the Black Friday weekend compared to last year, but higher foot traffic didn't translate into higher sales, according to the National Retail Federation. Shoppers only want to buy items with the big price cuts and that can't be good for retail profits. Retailers now hope they can make up the difference with deals on the web, with sales expected to break records on Cyber Monday. Those products bought online have to get to you somehow and Amazon.com thinks a drone may be a good option. In a televised interview, CEO Jeff Bezos said the biggest online retailer could start using unmanned drones to deliver packages within the next four or five years. Some though wonder if Bezos was cleverly delivering a publicity stunt at what is the retailer's most crucial time of the year. Other corporate headlines: Microsoft gets the ok to buy Nokia's mobile phone business from U.S. regulators. The EU is expected to make a decision later this week. And Hilton joins the IPO frenzy. The hotel chain is planning the biggest hotel debut in history. On to the economy now...manufacturing expanding at its fastest pace in 2-1/2 years and employment was up as well. European stocks were mostly lower with investors also worry about retail profits due to deep discounts.