If the oil and commodities sectors have had a rough ride this year, traders' shun words on Wednesday on Wall Street were Macys, Staples, and retail.
A sector often cited as one to benefit from any uptick in recovery in the world's biggest economy, the US retail sector felt the impact of a heavy designer label boot.
The tickers bore it out. The worst-performing sector was the US Clothing & Accessories Index, down 6.37% at 287 by the close. Right behind it, the US Apparel Retailers Index, down 4.3% at 731, then Footwear, Specialty Retails and Retail Reits. The wider US Retail index was also a top loser, down 2.1% at 827. You would be hard-pressed to spot where among them the fallers included the Hotels Index or Airlines.
Macys (NYSE:M) shares were slammed after its quarterly revenue fell short of analysts' estimates and the retailer lowered its guidance for fiscal 2016. Macys closed the session down 15.2% at $31.38.
The mace of Macys fell heavily on the bourse's top line too. It may have advanced 222 points on Tuesday, but on Wednesday the Dow Jones Industrial Average gave most of that back - 217 points to be precise - with retail stocks taking the brunt on their worst day since 2011.
The depressed close for markets, especially the retail sector, was not only Macys' doing, of course. The collapse of merger plans by Staples Inc (NASDAQ:SPLS) with Office Depot Inc (NASDAQ: ODP) also ruptured the market on a day when higher oil prices at least helped buttress the bourse declines. The stocks ended down 18.3% at $8.46 and down 40.4% at $3.63 respectively. A US district court on Tuesday sided with the Federal Trade Commission against the $6bn deal.
But apart from this session's retail sector snapshot, 2016 has not been a good year for mergers in the United States. In fact, after a frenetic year for takeovers in 2015, M&A has quite literally imploded with US deal failures in 2016 so far the worst ever recorded.
There have been 12 announced mergers and acquisitions with a deal size of $100bn or more in the world ever. Five of these blockbuster deals have been withdrawn — two of them in 2016.
Pfizer’s (NYSE:PFE) $160bn acquisition of Allergan (NYSE:AGN), the second-largest merger ever when announced in November 2015, a month ago became the largest deal failure ever after its advantages were sunk by a US Treasury Department new policy diktat.
The fifth largest deal ever to be withdrawn also happened this year. Honeywell’s (NYSE:HON) $103bn acquisition of United Technologies (NYSE:UTX), which was sunk in early March, after UTC spurned Honeywell’s offer, citing, among other things, increasingly nervous antitrust regulators.
One blockbuster deal is still pending: The $117bn offer by Anheuser-Busch InBev, already the largest brewer in the world, to acquire SABMiller, the second-largest brewer in the world. The deal was announced last year.
But given how anti-trust regulators and the US Treasury Department have maneuvered the fate of mergers this year, the question everyone is asking is - how much more disappointment can the investment bankers stomach?