Wall Street opens lower on weak retail sales
NEW YORK — Wall Street fell sharply in early trading Wednesday after the government reported weaker-than-expected retail sales in April.
The market has put a two-month rally on hold amid concern that an economic recovery won’t come as fast as once hoped. The disappointing retail sales report added to investors’ uneasiness.
The Commerce Department said retail sales fell 0.4 percent. Economists had forecast sales would be flat for the month. March sales figures were revised lower as well, to a decline of 1.3 percent from a previous estimate of 1.1 percent.
Consumer spending accounts for about two-thirds of economic activity. Without improved spending, the economy is more likely to remain mired in the recession.
In early trading, the Dow Jones industrial average fell 139.30, or 1.64 percent, to 8,329.81. The broader Standard & Poor’s 500 index fell 16.25, or 1.79 percent, to 892.10, while the Nasdaq composite index declined 21.49, or 1.25 percent, to 1,694.43.
The market is “unwilling to absorb anymore good news, so it’s absorbing some bad news,” Joe Clark, managing director of Financial Enhancement Group in Anderson, Ind., said of the retail sales data and the market’s pullback in recent days. “The consumer is not broke, just unwilling to spend in some areas.”
However, Clark did note the market is unlikely to test the lows seen in early March before the rally began.
Department store chain Macy’s Inc. said its first-quarter loss widened to $88 million, or 21 cents per share, during the first quarter. But excluding restructuring charges, losses totaled 16 cents per share, better than analysts’ expectations for a loss of 20 cents per share. Analysts don’t typically include charges in estimates.
Macy’s affirmed its 2009 outlook excluding restructuring costs, which is shy of analysts’ expectations. However, the company said it will beat its own outlook if the economy improves in the second half of the year.
Improvement in the housing sector is also seen as a key to an economic recovery, but investors got another dose of disappointing news Wednesday, when a new report showed the number of U.S. households facing foreclosure jumped 32 percent in April. More than 342,000 households received at least one foreclosure notice during the month, according to RealtyTrac Inc.
Investors had been shaking off weak economic reports over the past two months, pushing stocks sharply higher. But that trend hasn’t continued this week. On Tuesday, the Dow gained about 50 points, but broader indexes slid for the second straight day. The Dow fell Monday.
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