NEW YORK (CNN/Money) -
Lackluster holiday spending zapped stocks Tuesday but the markets still raced to a strong finish for the month of November.
A weaker dollar and disappointing consumer confidence report also weighed on stocks Tuesday.
The Dow Jones industrial average (down 47.88 to 10,428.02, Charts) fell about 0.5 percent and the Standard & Poor's 500 index (Charts) fell 0.4 percent.
The Nasdaq composite (down 10.06 to 2,096.81, Charts) index also lost some 0.5 percent.
While stocks lost ground Tuesday, they still managed big gains for the month. The 30-share Dow added about 4 percent in November, as did the S&P 500. The Nasdaq composite jumped 6 percent to its biggest one-month advance since October 2003.
"We are sort of due for a little bit of a digestion. When you run a marathon you have to rest a little bit," said Doug Sandler, chief equities strategist at Wachovia Securities. "Ultimately the market will head a little higher."
Ram Kolluri, chief investment officer and president of Global Value Investors, added that strong corporate earnings and positive economic news will probably provide the momentum needed to fuel a year-end rally. But Investors won't be in for a smooth ride, he said, as bond yields continue to rise and the dollar slides.
"This isn't going to be a straight line going up. It's going to be a two steps forward, one step back thing," Kolluri said. "But I am not expecting a big sell-off here."
Wal-Mart (down $1.09 to $52.06, Research) continued to weigh on the Dow and the retail sector Tuesday, a day after the No. 1 store chain slashed its November sales outlook. The discounter said it will cut prices through Christmas to stimulate sales, but the news did little to help its stock, which fell 2 percent.
"The street was expecting a strong confirmation from Wal-Mart saying, 'Yes, we had a terrific Thanksgiving sales,'" said Ram Kolluri, chief investment officer and president of Global Value Investors.
"They are managing their sales yield rather than their volume." he added. "I think that at the end of the day Wal-Mart will surprise the street with their holiday sales."
Investors, however, were less sanguine as two separate reports pointed to a disappointing start to the holiday shopping season. One report said total weekend sales only rose 2.9 percent while the other showed a 1.5 percent decline in sales during Thanksgiving week.
And that twin punch sent a variety of retail stocks tumbling.
Home Depot (down $1.20 to $41.75, Research), another Dow component, lost 2.8 percent, department store chain Federated (down $1.83 to $54.80, Research) lost 3.2 percent, Dillard (down $1.11 to $25.18, Research) sank 4.2 percent, Kohl's (down $1.61 to $46.16, Research) slid 3.4 percent, and Nordstrom (down $0.90 to $43.75, Research) eased 2 percent.
Electronics retailers Best Buy (down $1.40 to $56.38, Research) and Circuit City (down $0.75 to $15.59, Research) lost 2.4 percent and 4.6 percent, respectively.
The S&P retail index (down $9.01 to $448.04, Research) lost 2.6 percent.
Clothing retailer Hot Topic (down $2.47 to $16.37, Research) took a hit after slashing its fourth-quarter earnings forecast late Monday. Brokerages Wedbush Morgan and Fulcrum downgraded their ratings on the stock, which tumbled 13 percent.
In other corporate news, Pfizer (up $0.44 to $27.77, Research) reaffirmed its 2004 earnings forecast but warned 2005 and 2006 results may fall on back of patent expirations. Its shares gained 1.6 percent.
No. 1 pork producer Smithfield Foods (up $1.12 to $29.05, Research) posted a better-than-anticipated second-quarter profit Tuesday, lifting its shares 4 percent.
A ratings upgrade from Prudential boosted software maker Red Hat's (up $1.06 to $14.48, Research) shares nearly 8 percent, making it one of the leading gainers on the Nasdaq.
Taser International (up $1.98 to $27.44, Research) jumped 7.8 percent after shooting back at Amnesty International, saying the human rights organization ignored independent reports verifying the safety of Taser stun guns. Amnesty had cited concerns over excessive force.
Syneron Medical (down $10.15 to $27.05, Research) lost more than a quarter of its value after the Food and Drug Administration asked the Israeli health device maker to resubmit an application for a cellulite treatment product.
Market breadth was negative in light trading. On the New York Stock Exchange, decliners beat advancers by about 19 to 14 on volume of 1.54 billion shares. On the Nasdaq, losers topped winners by a similar margin as 1.86 billion shares traded.
Market-moving news
The dollar slid to a $1.3334 record low versus the euro in early trade, but edged slightly higher versus the yen. Investors fear a weak dollar will undermine the value of U.S. assets and could force the Federal Reserve to raise interest rates more aggressively to try to ward off inflation.
A weak dollar can also contribute to higher commodities prices.
Crude oil futures jumped as high as $50.40 a barrel earlier on the New York Mercantile Exchange before backing off to $49.13, down 63 cents. Brent oil gave up 30 cents to $45.40 a barrel in London.
Investors paid little attention to a stronger-than-expected report on the nation's gross domestic product (GDP), the broadest measure of the nation's economic health, while a drop in consumer confidence signaled economic growth may slow.
The Conference Board said its consumer confidence index for November dipped to 90.5 from a revised 92.9 October reading, coming in below Wall Street forecasts for a rise to 96.5. Wall Street views consumer confidence as a gauge for consumer spending, which fuels two-thirds of the GDP.
Third-quarter GDP, however, grew at a 3.9 percent annual pace in the July-to-September quarter, the government reported -- a reading that topped forecasts by economists who had expected the Commerce Department's prior reading of 3.7 percent to remain unchanged.
Elsewhere, Treasury prices eased, lifting the benchmark 10-year note yield to 4.35 percent from 4.33 percent late Monday. Bond prices and yields move in opposite directions.
Asian-Pacific markets finished mostly higher but Tokyo's Nikkei index lost 0.7 percent on a report showing weak industrial output. Major European markets ended mostly lower. (Check the latest on world markets.)
|
