Economy fears spook stocks

NEW YORK (CNNMoney.com) -- Disappointing sales from some major retailers and more economic worries ate into earlier optimism and could fuel the recent sell-off in stocks.

Stock futures, which predict the direction for stocks at the open, fell sharply after an 8:30 a.m. report that showed no gain in third quarter productivity. Economists had been looking for gains to slow to 1.1 percent rise after a 1.6 percent gain in the second quarter.

Initial jobless claims, which was forecast to rise to 310,000 also came in worse than expected at 327,000. At 10 a.m. ET will come a report on September factory orders, which are expected to be up 3.6 percent after being unchanged in August.

Stock futures, which had been up in earlier trading, had already started to slip after Wal-Mart Stores (Charts), the nation's No. 1 retailer, continued its recent string of disappointing sales news Thursday.

Wal-Mart warned that sales at U.S. stores open at least a year, a closely watched retail measure known as same store sales, would be essentially flat in November. That news followed its earlier announcement Saturday that October same-store sales were up only 0.5 percent, a result that missed its own lowered guidance and hit broader U.S. markets Monday.

Wal-Mart wasn't the only retailer with disappointing results. Target (Charts), the No. 2 general retailer, posted a 3.9 percent gain in same store sales, less than the 4.2 percent rise forecast at First Call.

Early Thursday wholesale club retailer Costco (Charts) reported same-store sales up 4 percent, although that was also less than forecasts of a 4.6 percent rise.

One of the first retailers to report sales was American Eagle Outfitters (Charts), which reported its results late Wednesday. The youth apparel retailer reported an 8 percent rise in same-store sales, and it raised its third quarter earnings per share guidance by two to three cents. But some had been looking for a 9.9 percent sales gain there and shares of American Eagle slipped 0.7 percent in after-hours trading.

Stocks have also been hit several times in the last week with concerns about weak economic readings, such as the gross domestic product report Friday that showed the weakest economic growth in more than three years, as well as Wednesday's reports on manufacturing and construction that also fell short of forecasts. Stocks closed lower Wednesday following that report, with the Dow closing lower for the fourth straight day for the first time since early August.

Falling gasoline prices have been expected to lift results for for many retailers, and oil prices were lower again in early trading. U.S. light crude was down 65 cents to $58.06 a barrel in electronic trading, while Brent crude trading in London was 71 cents lower at $58.27.

Media conglomerate Tribune Co. (Charts), whose holdings include the Chicago Tribune, the Los Angeles Times and the Chicago Cubs baseball team, has told prospective bidders it is prepared to consider offers to sell off parts of itself after receiving lower bids than expected for the entire company, according to a reports in the Wall Street Journal and New York Times.

Stocks in Asia closed mixed Thursday, with Hong Kong's Hang Seng hitting a record high, but Japan's Nikkei slipping and Australian stocks dropping from their record high set Wednesday. Nomura Holdings Inc., Japan's largest securities firm, agreed to buy U.S. electronic brokerage Instinet from U.S. private equity firm Silver Lake Partners. A sales price was not disclosed.

Stocks in Europe were also mixed in early trading.

Treasury prices were lower, taking the yield on the 10-year note to 4.59 percent from 4.56 percent late Wednesday. The dollar was little changed against the euro and the yen after being lower earlier.

More market news and futures ahead of the U.S. open

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