NEW YORK (CNN/Money) -
With volume kept light by the Veterans Day holiday and with investors kept on the sidelines by the lack of significant corporate or economic news, U.S. stock markets drifted quietly lower Tuesday.
The Nasdaq composite (down 10.89 to 1930.75, Charts) ended the day 0.6 percent lower, the biggest loser of the three major indexes. The Dow Jones industrial average (down 18.74 to 9737.79, Charts) and the Standard & Poor's 500 (down 0.54 to 1046.57, Charts) closed with barely noticeable losses.
"I think consolidation is kind of the theme here. It's been there for the past few days and I think it will continue," said John Hughes, market analyst at Epiphany Equity Research. "I don't think there's a big risk for a major decline out there, but I don't think there's much out there that's going to change what's going on."
Stocks have pulled back modestly in the past few sessions, mostly in lackluster trading, as investors have chosen to cash in after seeing the Nasdaq hit a 21-month high and the Dow a 17-month high last week. With a dearth of economic reports until late in the week, investors focused on a few early quarterly reports from retailers, as well as positive weekly retail sales numbers.
Retailers get a lift
Merrill Lynch also lifted its rating on several retailers, saying they should outperform the market in the next few months. Gap (GPS: up $0.30 to $21.03, Research, Estimates), Target (TGT: up $0.37 to $39.42, Research, Estimates), Abercrombie (ANF: up $0.97 to $28.83, Research, Estimates), BJ's Wholesale Club (BJ: up $1.13 to $27.03, Research, Estimates), Saks (SKS: up $0.39 to $15.24, Research, Estimates), Tiffany (TIF: up $1.52 to $48.72, Research, Estimates), Zale (ZLC: up $1.89 to $55.14, Research, Estimates), and Neiman-Marcus (NMG.A: up $1.07 to $51.74, Research, Estimates) were among those raised to "buy" from "neutral," and shares of each rose between 1 and 5 percent.
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Other retailers also saw interest in their shares after reporting better-than-expected results. J.C. Penney (JCP: up $0.37 to $23.65, Research, Estimates) shares rose 1.6 percent after the department store chain posted a 27-cent-a-share profit in the third quarter from continuing operations, down from 30 cents in the same quarter last year but a penny more than Wall Street's average estimate.
May Department Stores (MAY: up $0.18 to $29.58, Research, Estimates) shares tipped higher, too, after the retailer reported third-quarter pro forma earnings of 16 cents a share, beating analysts' average estimate by 5 cents a share.
Shares of Oakley (OO: up $1.83 to $12.75, Research, Estimates), which also received an upgrade, rallied nearly 17 percent.
Also boosting shares of retailers was a weekly sales report from the Bank of Tokyo-Mitsubishi and UBS. BTM/UBS said sales rose 1.2 percent last week, compared with a 0.5 percent rise in the prior week and 5.8 percent higher than the same period last year. The groups also said they expect sales to be strong during this year's holiday season.
On the tech front, a Wall Street Journal report that Oracle (ORCL: down $0.03 to $12.54, Research, Estimates) may give up its hostile $7.3 billion bid for PeopleSoft (PSFT: down $0.43 to $21.62, Research, Estimates) if it continues to offer refunds on software license fees under any takeover left PeopleSoft's stock almost 2 percent lower.
Consolidation could continue
No economic reports were set for release until Thursday, leaving investors to look ahead to the end of the week, when they'll get readings on the trade deficit, initial weekly jobless claims, producer prices, consumer sentiment and industrial production.
The major earnings report of the week, PC maker Dell (DELL: up $0.08 to $35.01, Research, Estimates), also was set for later in the week.
Traders said even the economic reports later in the week may not be able to push stocks out of their current depression. Though November is typically a good month for the market, the consolidation phase could continue into early December, when holiday spending and earnings pre-announcements hit full-force, they said.
Volume was fairly light, as some people had the day off from work for the Veterans Day holiday. On the New York Stock Exchange, declining stocks beat advancers six to four as 1.2 billion shares changed hands. Losing stocks sailed past winners on the Nasdaq by the same margin on volume of 1.6 billion shares.
Stocks in Europe closed mostly lower. Markets in Japan declined sharply overnight, with the Nikkei down 2.8 percent, hurt by weakness in tech, auto, and banking shares.
NYMEX light sweet crude oil rose 27 cents to $31.15 a barrel. COMEX gold rose $1.40 to $388.20 an ounce.
The dollar fell against the euro and rose slightly versus the Japanese yen amid speculation that the Bank of Japan had intervened in the currency market.
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