Stocks close lower after weak retail reports
Stocks closed lower for the third day straight Thursday after weak reports from the nation's retailers. Debate over the impending fiscal cliff is also weighing on stocks.
Stock indexes closed lower Thursday, a third straight decline, after U.S. retailers issued weak forecasts for earnings and more people filed claims for unemployment benefits.Skip to next paragraph
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The Dow Jones industrial average wavered between small gains and losses shortly after the opening bell, then moved lower at midmorning. It closed down 28.57 points, or 0.2 percent, at 12,542.38.
Investors are worried that U.S. leaders may not reach a deal before tax increases and government spending cuts take effect Jan. 1. The impact would total $700 billion 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 likely 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."
Obama will meet with congressional leaders Friday to talk about the budget, but he appeared to suggest Thursday 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 that stocksare more likely to fall than rise, partly because of slowing global economic growth and the U.S. budget impasse.
"The market has gotten well ahead of itself," Dale 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 euro zone, the group of 17 countries that use the euro currency, is in recession. The economy in the region shrank 0.1 percent 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 percent, to $54.44. Limited Brands dropped $1.10, or 2.4 percent, to $45.50.
The yield on the 10-year Treasury note was little changed at 1.59 percent.
Among stocks making big moves:
— NetApp, a data storage business, jumped $3.08, or 11.3 percent, to $30.20 after the company reported earnings that were higher than analysts were expecting.
— Viacom, the owner of Nickelodeon, MTV and the Paramount movie and TV studio, rose $1.24, or 2.6 percent, to $49.23. The media conglomerate did better than investors had expected thanks to lower costs and higher fees from cable and satellite companies for carrying its cable networks.
— Petsmart, a specialty pet retailer, jumped $2.63, or 4.1 percent, to $67.48 after raising its full-year outlook.
— Target rose $1.06, or 1.7 percent, to $62.44 after reporting that its profit rose more than analysts had forecast. The company also issued a strong outlook heading into the critical holiday season.
— Dollar Tree, a discount retailer that sells items for $1 or less, gained $1.94, or 5.1 percent, to $39.70 after the company said its net income rose 49 percent in the third quarter.
— Apple's market value fell below $500 million for the first time since May, as the maker of smartphones and tablets dropped $11.26 to $525.62. The company's market value climbed as high as $658 million Sept. 19, according to FactSet data.