Star-Bulletin news services
Thursday, May 8, 2003
Weak same-store sales
bring down market
NEW YORK >> Sluggish retail sales gave investors more incentive to cash in profits from Wall Street's recent rally today and send stocks lower for a second consecutive session.
Disappointing results from such retailers as Kohl's, which also issued a profit warning, contributed to the market's declines. But some pullback was still to be expected following weeks of gains made as companies reported surprisingly strong first-quarter earnings results. Despite the two-day slippage, analysts said the mood on Wall Street remains upbeat.
"It seems to be an orderly thing -- no dash for the exits. So far, so good," said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co.
Declining issues outnumbered advancers 4 to 3 on the New York Stock Exchange. Trading volume was light.
The Dow Jones industrial average closed down 69.41, or 0.8 percent, at 8,491.22. Yesterday, the Dow lost 27.73.
The broader market also retreated for a second day. The Nasdaq composite index fell 17.07, or 1.1 percent, to 1,489.69. The Standard & Poor's 500 index declined 9.35, or 1 percent, to 920.27. The Russell 2000 index fell 2.55, or 0.6 percent, to 407.68.
The price of the Treasury's 10-year note was down 1/16 point, while its yield rose to 3.68 percent from 3.67 percent yesterday. Two-year Treasury notes were down 3/32 point and yielded 1.46 percent, up from 1.41 percent yesterday.
"The undercurrent of the market remains quite strong," said Peter Cardillo, president and chief strategist of Global Partner Securities Inc. "I kind of think it is just profit taking and not the beginning of any major reversal here."
Kohl's fell $3.25 to $53.25 after the retailer reported April same-store sales, those at stores open at least one year, fell 4.1 percent, missing analysts' expectations for an increase of 3.5 percent. Kohl's also cut its quarterly earnings outlook.
Clothing retailer Chico's dropped $2.30 to $21.50 after reporting same-store sales rose 4.7 percent last month, missing analysts' expectations of a 7.9 percent increase.
But Gap rose 68 cents to $17.28 on an April same-store sales gain of 20 percent, much better than the 12.9 percent Wall Street anticipated.
Investors are particularly sensitive to news about retailers and consumers, whose spending accounts for two-thirds of the economy. Wall Street is waiting for evidence that the economy is picking up now that the war with Iraq has wound down, but so far, indicators have been mixed.
Other losses today grew out of bad earnings news and brokerage house downgrades. Pixar tumbled $2.77 to $56.64 after the animation company cut its second-quarter earnings estimate to less than half of what Wall Street was expecting.
AT&T fell 21 cents to $16.26 after CIBC World Markets downgraded it to "sector underperform" from "sector perform."
Overseas, Japan's Nikkei stock average finished down 1 percent. In Europe, France's CAC-40 fell 2.8 percent, Britain's FTSE 100 lost 1.6 percent and Germany's DAX index shed 4 percent.
STOCK QUOTES/CHARTS/DATA
