Wal-Mart drop puts a damper on stocks
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By Meg Richards
Associated Press
NEW YORK — Wall Street lost some momentum today after Wal-Mart Stores Inc. turned in a disappointing earnings report and government data showed a slightly higher number of jobless claims and a larger-than-expected trade deficit.
Analysts said investors were looking to cash in profits following a sharp run-up in the previous session. With the bulk of earnings over and bullish expectations high, the markets are in a period of consolidation, said Richard Cripps, chief strategist for Legg Mason of Baltimore.
"Thereâs nothing new occurring now to give incentive for an awful lot of buying, so weâre seeing a bit of a pause on the retail stocks," Cripps said. "Wal-Mart put a damper on things, no doubt."
The Dow Jones industrial average ended the day down 10.89, or 0.1 percent, at 9,837.94, following an advance of 111.04 yesterday.
The broader gauges were also little changed. The Nasdaq composite index lost 5.76, or 0.3 percent, to close at 1,967.35. The Standard & Poorâs 500 index closed down 0.15, or 0.01 percent, at 1,058.41.
The government reported that the U.S. trade deficit widened to $41.3 billion in September, larger than the $40.2 billion shortfall economists forecast. Import goods climbed to an all-time monthly high, a fresh sign of Americansâ appetite for foreign-made goods, and exports also posted solid gains, aided by a weaker U.S. dollar.
Separately, new claims for unemployment benefits rose by a seasonally adjusted 13,000 to 366,000 last week, the Labor Department reported. Even with the increase, the level of claims suggested that the labor market is stabilizing, economists said.
With the four-week moving average of jobless claims at its lowest level since March 2001, there still could be cause for cheer this holiday season, said Lynn Reaser, chief economist and senior market strategist, Banc of America Capital Management. "Overall, neither the outlook for retailers or the economic data should be cause for major concern," Reaser said. "With the gradual improvement in the jobs market, we think retail sales for the holiday season will be quite good."
Analysts say investors may remain ambivalent through the end of the year, torn between collecting profits and holding their investments in case the market moves significantly higher. Some investors have worried that stock prices are too high.
Wal-Mart declined $2.44, or 4.2 percent, to $55.52, after its earnings missed analyst estimates by a penny, and indicated earnings for this quarter could also be below forecasts. Its rival, Target Corp., matched expectations but also saw declines, losing 93 cents to close at $39.00.
Luxury retailer Tiffany & Co. shed $3.43, or 7.1 percent, ending the day at $44.70. The upscale jeweler reported a 20 percent decline in quarterly profits, largely due to an unfavorable comparison to the year-ago period, when it had a tax benefit.
Advancing issues outnumbered decliners about 5 to 4 on the New York Stock Exchange. Volume was moderate, with 1.32 billion shares traded, the same as yesterday.
