Lower open seen after brutal retail sales, Libor bump

Small-cap stocks are expected to open lower in a correction off the big recovery rally from Thursday afternoon. Another rise in Libor rates, a dip in energy prices overnight and a weak retail sales report should counter gains in European and Asian stocks, which spurred a 1% rise in the World Index. Sellers could also be a little reluctant to pull the trigger into a two-day G-20 economic summit starting today in Washington. Stock index futures were down about 1.4% in after-hours trading, which would suggest a Russell 2000 (NYSE:IWM) open near 484.25.

Retail sales came in at minus 2.8%, which marked the largest October decline on record (the data series started 16 years ago). The consensus forecast called for a decline of 1.5%, but the “whisper” numbers were steadily getting worse this week, so it’s reasonable to think that a decline of at least 2% was already priced into the market. Investors were able to shrug off Thursday’s jolting weekly unemployment numbers, and there remains a sense from many market watchers that negative economic data right now just isn’t a surprise.

Ahead of the retail sales release this morning, there were already headwinds on the individual retailer front. JC Penney Company Inc. (NYSE:JCP) slightly topped the forecast but cautioned that economic conditions will remain difficult well into the New Year. Also, shares of Kohl’s Corp. (NYSE:KSS) and Nordstrom Inc. (NYSE:JWN) tumbled in extended hours trading Thursday afternoon after the firms reported weak profits and downgraded the outlook. Abercrombie & Fitch Co. (NYSE:ANF) beat the . . .

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