Blue chips hit by retail, housing

NEW YORK (CNNMoney.com) -- Stocks slipped Thursday afternoon as investors sorted through a mixed batch of January retail sales reports and some revived profit concerns in the financial and housing markets.

The Dow Jones industrial average (down 59.12 to 12,607.75, Charts) lost about 0.5 percent more than 3 hours into the session after touching a record trading high Wednesday. The broader S&P 500 (down 3.84 to 1,446.18, Charts) index slid about 0.3 percent, after ending the previous session at a fresh 6-1/2-year high.

The Nasdaq (down 2.68 to 2,487.82, Charts) composite slipped 0.2 percent after jumping 0.8 percent Wednesday on upbeat earnings from Cisco (up $0.19 to $28.28, Charts).

Thursday brought an onslaught of January retail sales, which ran the gamut from weak to strong, suggesting a decent, but not remarkable post-Christmas period for the nation's chain stores.

In addition, concerns about the impact from the collapse in the housing market were revived. Toll Brothers warned about its quarterly revenue and HSBC Bank and New Century Financial warned about problems resulting from defaults on home loans.

The housing and loan concerns were "putting a bit of a scare into investors" Thursday, said Todd Salamone, senior vice president of research at Schaeffer's Investment Research.

However, he said any stock weakness resulting from revived worries about the housing sector today will soon pass, since a lot of those concerns aren't new and have been factored into the market already.

"We have some selling today, but it's nothing to get worried about," Salamone said, as the positive factors that have supported stocks for months remain in place.

Among the standouts, discount retailer Costco Wholesale (down $0.29 to $56.84, Charts) posted a smaller-than-expected rise of 2 percent in same-stores sales, a retail measure of sales at stores open a year or more. Shares slipped 1 percent in the morning

Limited Brands (down $0.26 to $29.03, Charts) posted a strong 11 percent rise in sales, but shares were little changed Thursday morning.

Clothing retailer Gap (up $0.50 to $19.75, Charts) posted flat same-store sales, versus a decline a year ago. That sent the stock about 4 percent higher Thursday morning.

In other news, Toll Brothers (down $1.07 to $33.36, Charts) warned that first-quarter homebuilding revenue and orders will fall sharply, and that it will take substantial writedowns related to land it optioned for development but now is walking away from, due to the housing slump.

A number of home building stocks declined in tandem, including Lennar (down $1.56 to $53.50, Charts) and Centex (down $1.35 to $51.73, Charts).

In addition, New Century Financial (down $8.61 to $21.55, Charts) warned that it didn't account correctly for some of the home loans it had to buy back, sending shares 28 percent lower.

HSBC Bank (down $2.35 to $89.87, Charts) warned that its bad debt charge for last year would be higher than expected, due to problems with its U.S. mortgage lending, sending shares lower.

A number of mortgage lenders and other financial stocks declined.

In other news Walt Disney (down $0.23 to $35.25, Charts) reported quarterly sales and earnings late Wednesday that rose from a year ago and topped estimates, sending shares 1.5 percent higher Thursday morning.

EMC (up $0.96 to $14.56, Charts) rallied 8 percent in active New York Stock Exchange trading after the computer data storage company said it will spinoff roughly 10 percent of VMware, its computing virtualization unit.

Market breadth was negative. On the New York Stock Exchange, decliners topped advancers three to two on volume of 800 million shares. On the Nasdaq, losers beat winners by a slim margin on volume of 1.04 billion shares.

U.S. light crude oil for March delivery rose 34 cents to $58.05 a barrel on the New York Mercantile Exchange, after falling in early morning electronic trading.

Treasury prices were little changed, with the yield on the benchmark 10-year note at around 4.74 percent, little changed from late Wednesday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar rose versus the yen and slipped versus the euro.

COMEX gold rose $3 to $660.30 an ounce.

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