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Shaky investors focus
on bad newsThe major indexes fell on weak
retail sales and results from Intel
NEW YORK » Stocks slumped yesterday as a worrisome combination -- lower-than-expected retail sales and a disappointing forecast from Intel Corp. -- offset upbeat earnings news from McDonald's Corp. and other companies.
A string of profit warnings from semiconductor companies have worried the equity markets for more than a week, and the picture only looked bleaker after chip bellwether Intel released its results late Tuesday. The market's tone seemed to temporarily improve following McDonald's midday announcement, but the advance was short-lived. Still, analysts remained optimistic.
"Despite all the worries, I think the earnings numbers will be spectacular," said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co. "Investors should not get discouraged because of the results of one company."
At the close of trading, the Dow Jones industrial average had dipped 38.79, or 0.4 percent, to 10,208.80.
The broader gauges also finished lower. The Nasdaq composite index shed 16.78, or 0.9 percent, to 1,914.88. The Standard & Poor's 500 index was down 3.67, or 0.3 percent, at 1,111.47.
Bond prices fell slightly yesterday. The price of the benchmark 10-year Treasury note fell 18 point, and its yield, which moves in the opposite direction, rose to 4.49 percent compared with 4.47 percent late Tuesday. The 2-year note fell 116 point to yield 2.60 percent.
In addition to the negative sentiment surrounding earnings, a discouraging report on retail sales also held buyers back. Sales at retailers fell 1.1 percent in June, the sharpest decline in 16 months, the Commerce Department said. Economists blamed bad weather, higher energy prices and slower payroll growth. The pullback followed a 1.4 percent rise in May.
Many market participants had hoped second-quarter results would help stocks break out of the tight trading range they've been mired in, but a steady march of earnings disappointments and profit warnings have dampened investor enthusiasm. Even so, the news has been mostly good so far.
But for investors already distracted by inflation, Iraq and the upcoming election, anything less than stellar seems like an upset.
The weaker retail numbers for June, and anxiety over whether they portend a broader trend of slowing job growth and dwindling consumer confidence, added to the queasiness yesterday. While earnings look good overall and market watchers are generally bullish about the economy, there may be little to drive stocks higher.
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