U.S. Stocks Fall As Retailers Outlooks Disappoint
NEW YORK (MarketWatch) -- Stocks opened lower Thursday, after U.S. retailers, including Wal-Mart Stores Inc., reported better-than-expected retail sales in March but said the outlook going forward was less rosy.
The Dow Jones Industrial Average dropped 43 points to 12,440, as 27 of its 30 components dipped in the red.
General Motors Corp. and AT&T Inc. were the worst performers on the blue-chip average, while Exxon Mobil Corp. was the best performer, thanks to a 1.6% gain in crude oil prices.
Among other blue chips, Wal-Mart fell 0.7% after the giant retailer posted a 4% increase in March sales at stores open at least on year, blowing past Wall Street estimates, but offered a tepid forecast for April.
The S&P 500 fell 3.7 points to 1,435, while the Nasdaq Composite lost 8 points to 2,451.
Technology shares also came under pressure after Research In Motion's quarterly sales missed Wall Street forecasts, while management's profit forecast left some analysts disappointed.
On Wednesday, stocks ended lower, with the Dow industrials breaking an eight-day winning streak, after the minutes from the latest Federal Open Market Committee meeting dashed hopes that the inflation-focused policymakers would be inclined to cut interest rates anytime soon.
On Thursday, investors will continue to parse the Federal Reserve's intentions on rates while focusing on a first-quarter earnings season that many analysts believe will feature only mediocre rates of growth.
"We had news that import prices went through the roof. As earnings season gets into full gear, we may see the market suffer a pullback of 3% to 5%," said Peter Cardillo, chief market analyst at S.W. Bach.
"The Fed has indicated it will not loosen rates any time soon, removing a positive catalyst from the market," he said. "But the catalyst for the pullback is most likely to be negative corporate-earnings guidance. "
Worries that the next move by the Fed could in fact be a rate increase were reinforced by news that import prices in March rose by 1.7%, the largest gain in 10 months.
The gain was far above the 0.6% expected by economists surveyed by MarketWatch. Outside of fuels, however, imported inflation was modest, rising 0.2%.
In other data, the Labor Department reported that first-time filings for state unemployment benefits rose by 19,000 in the week ended April 7 to 342,000, the highest in eight weeks.
The more-reliable four-week average of new claims -- which smoothes out distortions from events such as weather or holidays -- rose by 7,000, to 323,250, the highest in three weeks.
Stocks in motion
Separately, Genentech said first-quarter profit surged 68% and sales rose 43% from the same period a year ago even as sales of two of its key cancer treatments came in lower on a sequential basis.
Subprime mortgage lender NovaStar Financial Inc. said it is considering new strategic alternatives and is open to being purchased.
Similarly, MedImmune Inc. said it's considering alternatives, immediately boosting the company's stock.
Also playing off retailers sales results, Costco Wholesale Corp shares rose 0.4%. Costco's March same-store sales also beat expectations.
Pier 1 Imports announced a larger year-over-year-quarterly loss due to special charges and a decline in first-quarter sale store sales. However, excluding the charges, the company's results would have beat expectations.
Other markets
The rise in jobless claims alleviated some concerns in the Treasury market about the unexpectedly robust jobs growth reported for March last week. The benchmark 10-year note last was up 5/32 at 99 10/32 with a yield of 4.714%.
The euro trimmed some of its gains against the dollar after the European Central Bank held interest rates steady at 3.75%, as expected, and dented hopes of a rate hike in May. ECB chief Jean-Claude Trchet said monetary policy remains accommodative.
The euro was last up 0.2% at $1.3457, while the dollar was down 0.04% at 119.24 yen.
Gold futures made grudging gains tied to the movement in the greenback. Gold for June delivery added 40 cents at $682.10 an ounce on the New York Mercantile Exchange.
In energy, crude-oil futures rose, drawing support from the greater-than-expected decline in gasoline supplies reported by the government on Wednesday.
Crude oil for May delivery gained 76 cents, or 1.2%, at $62.77 a barrel.
By Leslie Wines