Stocks sink on economic worries
A sharp slide in oil prices wasn’t enough to keep stocks aloft Wednesday as March retail sales fell short of expectations and investors grew apprehensive about weak consumer spending. The Dow Jones industrial average sank more than 100 points in the face of glum corporate outlooks and anxiety about first-quarter results.
A bleak forecast from Harley-Davidson Inc. started the day on a sour note, and things only got worse for equity investors after the decline in fuel prices failed to lift stocks. The energy sector itself dropped 2.46 percent, making it one of the worst-performing segments of the market; the only sector to deliver a positive performance for the day was health care. This surprised some analysts, as it suggested a shift away from the commodity-driven stocks that have led the market, but few were alarmed by the pullback.
“The decline today reflected fear, really, of earnings announcements, and the weak retail sales. But the traditional ingredients for a bear market, I just don’t think, are in place yet,” said Ken Tower, chief market strategist for Schwab’s CyberTrader. “We’re looking at this as a bottoming process, money is moving out of the energy sector into other areas, particularly the long-lost health care sector.”
The Dow closed down 104.04, or 0.99 percent, at 10,403.93.
The broader gauges also fell. The Standard & Poor’s 500 index lost 13.97, or 1.18 percent, to 1,173.79. The Nasdaq composite index fell 31.03, or 1.55 percent, to 1,974.37.
Trading in the Treasury market was also choppy, partly because of a poorly received five-year note sale. The price of the 10-year note declined slightly, but its yield held steady at 4.36 percent. The U.S. dollar slipped against other major currencies; gold prices rose.
Crude futures sagged after the International Energy Agency forecast slower growth in oil demand this year, and the U.S. Department of Energy reported a larger-than-expected build in fuel supplies. Light, sweet crude for May delivery shed $1.64 to settle at $50.22 per barrel on the New York Mercantile Exchange. Analysts said the lack of a positive reaction in stocks suggests investors may be skeptical about whether the declines will stick.
Decliners outnumbered advancing issues by 3 to 1 on the New York Stock Exchange. Preliminary consolidated volume came to 2.05 billion shares, compared to 1.99 billion Tuesday.
Overseas, Japan’s Nikkei stock average shed 0.28 percent. In Europe, France’s CAC-40 added 0.49 percent, Britain’s FTSE 100 rose 0.30 percent and Germany’s DAX index was up 0.77 percent.
© Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.