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US Stocks: Surprisingly weak retail sales hit Wall St.

Posted on: April 15, 2009


Reuters – Wednesday, April 15

* March retail sales worse than expected

* Goldman in $5 billion issue after strong earnings

* Johnson & Johnson Q1 slightly better than expected

* Dow down 1.1 pct, S&P and Nasdaq each off 1.3 pct

* For up-to-the-minute market news click [STXNEWS/US]

By Leah Schnurr

NEW YORK, April 14 – U.S. stocks slipped on Tuesday in a broad-based decline after an unexpected drop in retail sales dented optimism that the economic slump is moderating and underscored worries that consumers are reluctant to spend.

Sales at U.S. retailers fell 1.1 percent in March, snapping two months of increases and hitting a wide range of stocks such as Macy’s Inc <M.N>, which slumped almost 7 percent, and oil producer Chevron <CVX.N>, down 2 percent. For details see [ID:nN14419657].

“The retail sales numbers this morning were clearly disappointing, with investors looking for signs that consumers were starting to emerge from their bunker mentality despite very strong headwinds,” said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.

Bank shares also pressured the market after Goldman Sachs <GS.N> posted a much higher-than-expected first-quarter profit after Monday’s close, a day early, but said it planned a $5 billion sale of common stock to help pay back government funds. Goldman’s stock slid 6.4 percent to $121.89.

The financial sector has surged in recent weeks after some major banks said they had made money in the first two months of the year. Citigroup <C.N>, which reports quarterly results later in the week, rose 5.3 percent to $4.00, off a session high of $4.48.

The Dow Jones industrial average <.DJI> fell 90.80 points, or 1.13 percent, to 7,967.01. The Standard & Poor’s 500 Index <.SPX> was off 11.46 points, or 1.33 percent, to 847.27. The Nasdaq Composite Index <.IXIC> was down 21.03 points, or 1.27 percent, at 1,632.28.

U.S. stock markets have enjoyed a five-week rally spurred by optimism about the economy and the financial sector, and lifting the S&P 500 nearly 26 percent from a bear market closing low in early March. But the S&P 500 is still down 6.24 percent for the year.

On the upside, Johnson & Johnson <JNJ.N> was the Dow’s top advancer after the diversified health-care company reported better-than-expected profit on lower costs, even as it was hurt by generic competition. J&J’s stock rose 1.5 percent to $51.90. [ID:nN07344610].

Wal-Mart’s <WMT.N> shares fell 1.2 percent to $50.91 after the retail sales data and Macy’s stock lost 6.6 percent to $12.08. The S&P Retail Index <.RLX> dropped 2.1 percent.

Even so, the U.S. Commerce Department’s March retail sales report did not completely douse hopes of economic stabilization as Federal Reserve Chairman Ben Bernanke said in prepared remarks that recent figures on housing and consumer spending suggest a rapid contraction in the economy could be easing.

Despite Tuesday’s less encouraging data, other recent reports have suggested the economic downturn is moderating. [ID:nN14413989].

Chip maker Intel <INTC.O> is set to kick off tech earnings season after the market’s regular session closes, with results closely eyed for guidance on the semiconductor market. Intel shares were up 0.1 percent at $15.99 on Nasdaq.

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