US stocks in steepest slide in 2 months
Stocks slumped in their steepest fall in two months on Thursday, as disappointing retail sales and a widening trade deficit aroused worries about the economy.business Updated: May 11, 2007 05:31 IST
Stocks slumped in their steepest fall in two months on Thursday, as disappointing retail sales and a widening trade deficit aroused worries about the economy.
Investors opted to lock in profits after a string of record highs for blue chips in recent weeks, and a day after the Federal Reserve said it was still concerned about inflation.
Stocks sensitive to economic growth, including energy companies such as Exxon Mobil and manufacturers including Caterpillar led the decline.
US retailers reported the weakest April sales results on record, after cold, stormy weather coupled with an earlier Easter holiday than a year ago, with some chain stores also cutting their earnings forecasts.
Federated Department Stores Inc was among the majority of retailers reporting sales that missed expectations, sending its shares tumbling.
"Today's downturn is a combination of retail sales numbers being weak and the fact the Federal Reserve did not provide any further hints that it's getting closer to lowering interest rates yesterday," said Michael Sheldon, chief market strategist at Spencer Clarke in New York.
"The market's performance today doesn't mean it is falling apart. But in the very near term we may see some profit taking and hesitation as investors await more economic data."
The Dow Jones industrial average at 13,215.13. The Standard & Poor's 500 Index or 1.4 percent, at 1,491.47. The Nasdaq Composite Index at 2,533.74.
Of the 30 Dow stocks, only four closed higher.
Among other economic reports that unnerved investors, the US trade data showed imports rose to the second highest level on record in March, driven by higher oil prices.
The government also reported April import prices -- an inflation gauge used by the Federal Reserve -- rose more than expected, while export prices posted a smaller-than-forecast gain.
Shares of Amgen Inc. slid after a US advisory panel called for marketing restrictions on popular anemia drugs sold by the companies. Amgen shares slid 9.14 per cent to $57.33, making it the biggest drag on the Nasdaq, while Johnson & Johnson fell 2.51 per cent to $62.50.
Children's Place Pacific Sunwear of California Inc Research were among retailers who cut their first-quarter earnings forecast after reporting April sales. Children's Place shares were down 2.56 per cent to $52.09, while Pacific Sun stock shed 0.91 per cent to $20.58.
Federated Department Stores shares fell 3.93 per cent to $42.10 while Wal-Mart shares were down 0.38 per cent at $47.75 on the NYSE.
Caterpillar's shares fell 1.26 per cent to $73.81 and Exxon Mobil's shares closed 2.07 per cent lower at $79.39.
Shares of insurer American International Group were little changed at $72.20 in extended trade, after earnings beat Wall Street estimates.
Trading was light on the NYSE, with about 1.53 billion shares changing hands, below last year's estimated daily average of 1.84 billion. On Nasdaq, about 2.24 billion shares traded, above last year's daily average of 2.02 billion.
Declining stocks outnumbered advancing ones by a ratio of about 4 to 1 on the NYSE and Nasdaq.