Triple-digit selloff on Dow

Wall Street retreats on weaker-than-expected economic news, while Goldman Sachs and J&J report surprisingly better quarterly results.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
By Alexandra Twin, senior writer

What will you do with your income tax refund?
  • Spend it
  • Save it
  • Not getting a refund
10 biggest CEO paychecks
Including salary, bonuses, stock and options, these public company CEOs took home pay packages last year worth up to $104 million.
Tracking the bailout
Who's getting the bank bailout money
The government is engaged in an unprecedented - and expensive - effort to rescue the economy. Here are all the elements of the bailouts.

NEW YORK ( -- Stocks slumped Tuesday, after a weaker-than-expected retail sales report gave investors a reason to retreat following a five-week run.

The Dow Jones industrial average (INDU) lost 137 points, or 1.7%. The S&P 500 (SPX) index lost 17 points, or 2%. The Nasdaq composite (COMP) lost 27 points, or 1.7%.

Stocks have been on the rise for five straight weeks on bets that the worst for the economy and financial sector has already happened. But with consumer spending a big driver of the economy, the weak retail sales report caused fresh concern among investors.

"The retail sales report was a factor, but I also just think the market had to breathe a little bit after the run we've seen," said Ron Kiddoo, chief investment officer at Cozad Asset Management.

Stocks were already vulnerable to a retreat after the recent rally lifted the Dow 22%. It was the blue-chip barometer's best five-week run since May 1933, when it gained 31%.

The advance followed a downturn that left the Dow and S&P 500 at more than 12-year lows, as of March 9.

Kiddoo said that those lows will likely withstand further selloff attempts, but that supposed market bottoms made in the fall proved to be false floors.

"It seems like this time is different because you're seeing a little better attitude now," he said. "Most of the people who were going to bail, have bailed already."

In corporate news, Goldman Sachs (GS, Fortune 500) reported a better-than-expected quarterly earnings report late Monday, making it the second financial firm to surprise to the upside. But investors sent shares lower nonetheless, with the stock having spiked 54% year-to-date prior to the Monday announcement.

Last week, Wells Fargo (WFC, Fortune 500) forecast a nearly $3 billion quarterly profit.

Wednesday preview: After the close, Intel (INTC, Fortune 500) reported weaker quarterly sales and earnings that topped expectations. The company's chief executive also said that he thinks PC sales bottomed in the first quarter and that the industry is returning to "normal seasonal patterns."

Wednesday morning brings government reports on consumer prices, industrial production and capacity utilization and weekly energy supplies. In the afternoon, the Fed releases its "Beige Book" a periodic reading on the economy. Wednesday is also the deadline for income tax returns.

Retail sales: Retail sales fell 1.1% in March after rising a revised 0.3% in February. Economists surveyed by thought sales would rise 0.3%. Sales excluding volatile autos rose 0.9% after jumping a revised 1% in the previous month. Economists thought sales would be unchanged.

The retail sales report underscores the volatility of the data right now, said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc.

"The consumer fell out of bed at the end of last year, we had a bounce in January, February didn't do much and March was bad," he said. "But why expect the consumer to have suddenly recovered when the economy hasn't yet recovered?"

Economy: In addition to retail sales, reports were released on wholesale inventories and business inventories.

The Producer Price index (PPI) fell 1.2% in March after rising 0.1% in the previous month. Economists expected PPI to be unchanged. The so-called "core" PPI, which strips out volatile food and energy prices, was unchanged after rising 0.2% in the previous month. Economists thought it would increase 0.1%.

February business inventories fell 1.3% after falling 1.3% in the previous month. Economists surveyed by thought inventories would fall 1.2%.

In other news, Federal Reserve Chairman Ben Bernanke said Tuesday that there are "tentative signs" that the economy's slide is slowing, but that a full recovery won't come until the financial sector stabilizes.

President Obama spoke Tuesday about his administration's efforts to stabilize and recharge the economy. He warned about unpopular choices when it comes to restructuring the auto industry and American International Group (AIG, Fortune 500).

Results: Goldman Sachs released better-than-expected quarterly profits late Monday, earning $3.39 per share on revenue of $9.43 billion. The company also said it plans to raise $5 billion through a stock offering to be used toward paying back its $10 billion government loan. Shares fell 11.6% Tuesday.

Other financial shares slipped too, sending the KBW Bank (BKX) index down 8.1%.

On Tuesday morning, Dow component Johnson & Johnson (JNJ, Fortune 500) reported weaker quarterly earnings that nonetheless topped estimates. Shares were little changed.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by more than seven to three on volume of 1.75 billion shares. On the Nasdaq, decliners topped advancers two to one on volume of 2.29 billion shares.

Bonds: Treasury prices rose, lowering the yield on the benchmark 10-year note to 2.78% from 2.82% Monday. Treasury prices and yields move in opposite directions.

Other markets: In global trading, Asian markets ended higher, with the exception of the Japanese Nikkei and European markets ended higher.

In currency trading, the dollar gained versus the euro and fell against the yen.

U.S. light crude oil for May delivery fell 64 cents to settle at $49.41 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery fell $3.80 to settle at $892 an ounce. To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.