Disappointing retail sales figures and an unexpected jump in unemployment claims prompted investors to take profits from the prior session’s robust rally Thursday, leaving stocks mixed despite another big drop in oil prices.
One day after crude oil futures posted their biggest decline since September 2001, oil prices again fell sharply. A barrel of light crude for January delivery settled at $43.25, down $2.24 on the New York Mercantile Exchange. Crude prices fell as low as $42.50 during the session.
However, stock investors were disappointed with November sales reports from the nation’s retailers. A number of top retailers issued lower-than-expected sales reports as the holiday shopping season got under way. With two-thirds of the U.S. economy powered by consumer spending, many investors hoped strong holiday spending would boost the economy through the end of the year.
“Obviously retail sales are a major concern going forward, but the falling oil prices will definitely help the market,” said Michael Sheldon, chief market strategist at Spencer Clarke LLC. “If we can stabilize around the $40 level, we’ll see a pretty good year-end rally in stocks.”
The Dow Jones industrial average was down 5.10 points, or 0.1 percent, at the close, having climbed more than 162 points Wednesday. The broader Standard & Poor’s 500-stock index was down 1.04 points, or 0.1 percent, while the technology-rich Nasdaq composite index gained 5.34 points, or 0.3 percent.
Investors were nervous after the Labor Department reported a sharp rise in first-time unemployment claims, which climbed 25,000 to 349,000 last week. Wall Street expected an increase of just 7,000. While unemployment generally remains low, the Labor Department figures, coming just one day before a major job creation report for November, were cause for concern on Wall Street.
“I think what you’re seeing here is a little bit of profit taking after a really impressive day yesterday, and the retail figures and unemployment are good triggers for that,” said Brian Williamson, equity trader at The Boston Company Asset Management. “There’s no real big reason, nothing glaring, for this move to the downside, so we’re probably looking at some short-term asset allocation moves out of equities.”
Should jobs increase and oil prices continue to fall, more consumers could be drawn back to the stores, increasing investors’ confidence in stocks. However, it looks like this holiday season may continue to be lackluster. With a mediocre start to shopping last weekend, many retailers have cut their sales and profit outlooks. Wal-Mart Stores Inc. climbed 18 cents to $53 despite reporting November sales that rose just 0.7 percent in November, matching reduced expectations.
Other retailers saw their November sales fall compared to a year ago, including Pier 1 Imports Inc., Federated Department Stores Inc. and Limited Brands Inc., which operates Victoria’s Secret and Bath & Body Works. Pier 1 slumped 42 cents to $18.30, Federated lost 15 cents to $55.07 and Limited Brands was down 66 cents at $23.94.
A few retailers managed solid gains, led by J.C. Penney Co.’s 12 percent rise in November sales from a year ago. American Eagle Outfitters Inc. and Bebe Stores Inc. also saw strong sales. J.C. Penney nonetheless fell 20 cents to $38.90, while American Eagle climbed 33 cents to $43.29 and Bebe gained 4 cents to $38.99.
Federal regulators said Kmart Holding Corp. overstated its past earnings and improperly accounted for millions of dollars in vendor payments before the retailer entered bankruptcy in 2002. Kmart fell 13 cents to $103.92. And the New York Times Co. skidded 97 cents to $40.09 after the media company issued a reduced profit forecast for the fourth quarter.
Dow component Intel Corp. slipped 39 cents to $22.71 as investors waited for the semiconductor giant’s mid-quarter update, released after the session’s end. Intel dramatically raised the range of its fourth-quarter sales forecast due to strong holiday demand for microprocessors, the brains of personal computers.
Microsoft Corp. shareholders received their $3-per-share dividend Thursday, but although volume was strong, there was no notable increase in buying, according to strategists and floor traders. Microsoft fell 16 cents to $27.09 on better-than-average volume for the stock.
Overseas, Japan’s Nikkei stock average surged 1.75 percent. In Europe, Britain’s FTSE 100 closed up 0.33 percent, France’s CAC-40 gained 0.39 percent for the session, and Germany’s DAX index climbed 0.73 percent.