Retail Doesn't Suit Wall Street, Crude Rallies

Retail Doesn't Suit Wall Street, Crude Rallies

US stocks fell today after worse-than-expected sales drops at Macy's and Kohl's sparked a sell-off in shares of department stores and stirred fears on Wall Street that consumers are not spending enough to drive strong economic growth. 

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The Dow Jones Industrial Average fell 0.11 percent to end at 20,919.42 points and the S&P 500 lost 0.22 percent to close at 2,394.44. The Nasdaq Composite dropped 0.22 percent to 6,115.96.

US stocks fell from records, though losses eased in afternoon trading as crude’s rally took the price of a barrel back above $48 in New York. Treasuries rose with gold as tepid earnings raised new doubts about the strength of the American consumer. The weak sales at department stores underscored rising angst that the biggest part of the US economy isn’t picking up the pace enough to raise growth rates. Investors will get a fresh read on Friday with US retail sales. At the same time, political intrigue continues to roil Washington two days after the president abruptly fired the head of the FBI. The path for interest rates will remain a major focus amid growing bets for a Fed increase in June and talk of tapering by the European Central Bank.

Macy's dismal quarterly performance sent its shares tumbling 17 percent, taking a toll on the consumer discretionary sector, which fell 0.59 percent. Kohl's dropped 7.86 percent after it reported a drop in quarterly sales, while shares of Nordstrom and J.C. Penney each dropped more than 7 percent. Brick-and-mortar retailers are getting hurt probably more than anybody would have expected, as internet sales continue to chip away at their consumer base and US consumption may be flagging.

The weak corporate reports left investors looking to April retail sales data due out on Friday for signs of whether consumers are simply shifting their spending habits away from department stores, or just aren't spending. It's a gut check about the health of the consumer

Eight of the 11 major S&P sectors declined. Financials fell 0.53 percent, weighed down by a 1.79-percent loss in Wells Fargo. Any market pullback, if orderly, could be seen as healthy as long as the underlying fundamentals for the market are strong. So perhaps this was a prescribed pullback and returns a sense of equilibrium to the markets.

Declining issues outnumbered advancing ones on the NYSE by a 1.58-to-1 ratio; on Nasdaq, a 1.73-to-1 ratio favored decliners. The S&P 500 posted 16 new 52-week highs and 9 new lows; the Nasdaq Composite recorded 92 new highs and 65 new lows.

About 6.7 billion shares changed hands on US exchanges, in line with the daily average over the last 20 sessions.


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