Wall Street’s main stock indexes struck fresh lows for the year Thursday, as a cautious forecast from Apple Computer Inc. unsettled investors, who are growing uneasy about the economy despite signs of continued improvement in the labor market.
The Dow Jones industrial average and the Standard & Poor’s 500 sank to five-month lows, reflecting the market’s anxiety about interest rates and the economy. Following a disappointing retail sales report for March, investors seemed intent on focusing on negative news, but with earnings season just barely under way, some analysts said it was too soon to assume the worst.
“We don’t think any kind of concrete opinion about earnings can come be formed yet because we’re still in the early stages,” said Brian G. Belski, market strategist at Piper Jaffray. “We are in defensive, reactionary times, which longer term, have traditionally provided good entry points.”
The Dow Jones industrials were down 125.18 points, or 1.2 percent, at the close of trading, finishing at their worst level since Nov. 3. The broader S&P 500-index fell 11.74 points, or 1 percent, to its worst level since Nov. 4. And the Nasdaq composite index shed 27.66 points, or 1.4 percent, closing at its lowest level since Oct. 26.
Analysts were struck by what many characterized as a shift in the market following Wednesday’s lower-than-expected retail sales results, which ignited fears of a slowdown in consumer spending, and in turn, corporate earnings. The only thing that could ease those concerns could be upbeat forecasts for the rest of the year from market bellwethers reporting over the next few weeks.
“You haven’t heard the phrase ’economic slowdown’ in a while. There are real questions about the strength of the economy in the second half,” said Jay Suskind, head trader at Ryan Beck & Co. “Investors are wondering if these numbers are the best were going to see. It’s as if good news is bad and bad news is bad. The sentiment is one of fears and jitters, and no one wants to buy this market.”
Crude prices were volatile a day after flirting with a seven-week low. Light, sweet crude for May delivery slipped in early trading, but rebounded after falling below the $50 mark. Oil futures climbed 91 cents to settle at $51.13 per barrel on the New York Mercantile Exchange.
The number of Americans seeking unemployment benefits for the first time fell by 10,000 last week, a second straight week of improvement, according to the Labor Department. That brings the four-week moving average, designed to smooth out volatility, to 338,000, a level still seen as signaling improvement in the job market. The weekly data was in line with expectations.
Apple declined 9.2 percent, or $3.78, to $37.26, after the computer maker’s quarterly profits jumped more than sixfold thanks to its iPod music players. The results soundly beat Wall Street estimates, but Apple remains somewhat cautious about the prospect of sales in the kindergarten through high school market because of state budget shortfalls that have curtailed public school districts’ spending.
General Motors Corp. plunged to a 12-year low after United Auto Workers officials indicated they were not willing to reopen a labor contract to negotiate lower health care costs. The automaker lost 5.9 percent, or $1.67, to $26.66.
Among gainers, Kerr-McGee Corp. rose 6.7 percent, or $4.93, to $78.90, after the oil and gas company said its board had authorized a tender offer to buy back up to $4 billion of the company’s common stock at a price between $85 and $92 per share.
Separately, the company said it reached a settlement with billionaire financier Carl Icahn, certain affiliated funds and Jana Partners LLC, who own 7.5 percent of Kerr-McGee collectively and were seeking election to the company’s board.
Mentor Corp. surged 7.3 percent, or $2.58, to $37.91, after the Food and Drug Administration recommended its silicone-gel breast implants be returned to the market after being virtually banned for 13 years, as long as the company heeds certain conditions. Rival manufacturer Inamed Corp., whose silicone implant was rejected by regulators Wednesday, slid $3.21 to $60.30.
Overseas, Japan’s Nikkei average shed 0.6 percent. In Europe, France’s CAC-40 declined 0.1 percent, Britain’s FTSE 100 lost 0.3 percent and Germany’s DAX index slipped 0.1 percent.