Dow tumbles 109 in erratic trading

By Sara Lepro
Associated Press

NEW YORK » Wall Street ended an erratic session yesterday with a lopsided loss as blue chips fell on investors' concerns over the health of financial companies, and high-tech stocks fared better on news from the semiconductor sector. The Dow Jones industrials fell more than 100 points, but the other major indexes finished with single-digit losses.

The market was battling all the forces that have pummeled it in recent weeks: weak economic data, the price of oil and the credit crisis. Investors started the day disappointed by the government's retail sales report, and a jump in oil prices further dampened the mood; the financial sector was pulled lower by lingering uneasiness over the prospect of more credit-related losses at banks and brokerages.

The Commerce Department said retail sales slipped 0.1 percent as rising prices helped offset the effect of economic stimulus payments to U.S. households. Excluding a big drop in sales of automobiles, retail sales rose 0.4 percent. But even on that basis it was the weakest showing in five months.

Wall Street had expected sales to remain flat after a minor increase in June. The report followed a warning from department store bellwether Macy's Inc. that its full-year profits would fall short of expectations because of slower sales. Macy's inched up 39 cents to $20.66.

The retail numbers pointed to a consumer who remains uneasy about spending. And because consumers' spending accounts for more than two-thirds of the economy, the fear on Wall Street is that the nation is in for a prolonged period of slow or even no growth.

The advance in oil prices also tinged investor sentiment, raising the prospect of higher inflation that will further cut into consumers' ability to spend . Light, sweet crude rose $2.99 to $116 a barrel on the New York Mercantile Exchange after the government said U.S. crude supplies fell unexpectedly last week.

Applied Materials Inc. did cheer the market somewhat, forecasting that orders would climb 5 percent to 10 percent in its fiscal fourth quarter. Applied Materials rose 86 cents, or 4.7 percent, to $19.33.

The Dow fell 109.51, or 0.94 percent, to 11,532.96.

The Standard & Poor's 500 index slipped 3.76, or 0.29 percent, to 1,285.83, while the tech-focused Nasdaq composite index fell 1.99, or 0.08 percent, to 2,428.62.

Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange. Consolidated volume came to 4.68 billion shares, up from Tuesday's 4.55 billion.

The Russell 2000 index of smaller companies rose 2.75, or 0.37 percent, to 747.69.

Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.94 percent from 3.90 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices rose.

STOCK QUOTES/CHARTS/DATA