Stocks fall after weak retail data
Stock indexes closed lower today, a third straight decline, after US retailers issued weak forecasts for earnings and more people filed claims for unemployment benefits.
Wal-Mart, Ross Stores and Limited Brands, the owner of Victoria’s Secret, all fell after issuing forecasts that disappointed financial analysts. Wal-Mart fell 2.59 dollars, or 3.6%, to 68.72 dollars.
The Dow Jones industrial average wavered between small gains and losses shortly after the opening bell, then moved lower at mid-morning. It closed down 28.57 points, or 0.2%, at 12,542.38.
The Standard & Poor’s 500 index dropped 2.17 points to 1,353.32 and the Nasdaq composite finished 9.87 points lower at 2,836.94.
Stocks have fallen steadily since voters returned President Barack Obama and a divided Congress to power. The Dow has lost 5% since Election Day, November 6.
Investors are worried that US leaders may not reach a deal before tax increases and government spending cuts take effect January 1. The impact would total 700 billion dollars for 2013 and could send the country back into recession.
Bill Stone, chief investment strategist at PNC Asset Management Group in Philadelphia, said the bargaining in Washington would probably drag on until next year, weighing on stocks. “It’s hard to see the market getting a whole ton of traction until that gets settled,” he said.
Mr Obama will meet congressional leaders tomorrow to talk about the budget, but he appeared to suggest today that he would insist on an increase in tax rates for the wealthy.
T Dale, a portfolio manager at Security Ballew Wealth Management in Jackson, Mississippi, said stocks are more likely to fall than rise, partly because of slowing global economic growth and the US budget impasse.
“The market has gotten well ahead of itself,” he said.
Superstorm Sandy drove the number of Americans seeking unemployment benefits up to 439,000 last week, the Labor Department reported. Applications for benefits rose 78,000, mostly because a large number were filed in storm-damaged states.
The European Union’s statistics agency confirmed that the eurozone, the group of 17 countries that use the euro currency, is in recession. The economy in the region shrank 0.1% in the third quarter from the previous three-month period.
Among the retailers disappointing Wall Street with lower earnings forecasts, Ross Stores, whose stores includes Ross Dress for Less, fell 70 cents, or 1.3%, to 54.44 dollars. Limited Brands dropped 1.10 dollars, or 2.4%, to 45.50 dollars.
The yield on the 10-year Treasury note was little changed at 1.59 %.
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