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Weak retail sales
send stocks lower
NEW YORK >> Stocks resumed their decline yesterday as investors, concerned that slumping retail sales would further slow the economy, abandoned small-cap and technology shares. The Nasdaq composite index extended its loss for the month to 112 points, while the Standard & Poor's 500 index fell into negative territory for the year.
Wal-Mart Stores Inc., which reported weaker-than-expected June sales due to cooler weather, joined Target Corp. and other retailers in an overall lackluster retail showing. Consumer spending is the biggest catalyst in the economy, and investors worried about the impact the lack of spending would have on corporate earnings.
Yahoo! Inc.'s earnings report, which disappointed investors due to a lower-than-expected outlook, helped drive tech stocks lower.
The retail reports and disappointing earnings overshadowed good news about jobs. The number of first-time jobless claims fell to a three-year low and came in better than analysts expected. However, the creation of jobs still remains an issue after last week's disappointing payroll report for June. The light volume in yesterday's trading showed many investors were keeping to the sidelines.
"You look at the retail report, job creation, interest rates, whatever, and it creates this drab, uninspiring backdrop for the market that makes it harder to commit any money right now," said Jeff Kleintop, chief investment strategist for PNC Financial Services Group. "Volume is very light, but that's not a sign of complacency. It's a sign that investors are paralyzed by all these background issues."
The Dow Jones industrial average fell 68.73, or 0.7 percent, to 10,171.56. It was the fourth loss in the five trading sessions so far this month.
Broader stock indicators were also lower. The S&P 500 index was down 9.22, or 0.8 percent, at 1,109.11, and the tech-focused Nasdaq dropped 30.76, or 1.6 percent, to 1,935.32. Both indexes have also been down four of five trading days in July; the Nasdaq has lost more than 112 points this month while the S&P 500 has joined the Dow and Nasdaq in suffering a loss for the year.
However, some analysts were happy that despite the bad news -- which also included oil prices topping $40 a barrel and new warnings of terror threats in the United States -- the market's losses weren't greater.
"Considering all the bad news out on the tape today, things could be worse. You can't really point to a lot of good news out there right now," said Bryan Piskorowski, market analyst at Wachovia Securities. "It's ugly, but it looks like the market's trying to hold tight and wait for those second quarter earnings results."
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