May 21, 2011 in Business

Retailers’ news sends stocks lower

Francesca Levy And David K. Randall Associated Press
 

NEW YORK – Stocks closed broadly lower for a third straight week on signs that U.S. consumer demand may be weakening.

Retailers Gap Inc. and Aeropostale Inc. each lost more than 14 percent Friday after cutting their profit forecasts for the year, in part because of higher costs for raw materials and sluggish sales. That was a worrying sign for investors who had counted shoppers to lead a recovery in spending.

Gap’s results pushed down other clothing companies who have been hit hard by the rising price of cotton and shoppers who are reluctant to splurge. Polo Ralph Lauren Corp. and J.C. Penney Co. each dropped 4 percent, while Urban Outfitters Inc. fell 3 percent.

One exception to the retailer gloom was Barnes & Noble Inc. The bookseller jumped 30 percent after announcing late Thursday that Liberty Media Corp. had offered to buy the company for $1 billion in cash.

Stock indexes have been staying within a relatively small range since a May 4 plunge triggered by a sharp drop in oil prices. The Dow fell more than 200 points in two days. After several weeks of waffling, the index is trading slightly above where it was after that two-day fall.

May is traditionally a weak month for the stock market. Traders have little to base buying and selling decisions on with corporate earnings season officially over and economic news scarce. Trading has been relatively light.

A stronger U.S. dollar has also hurt stocks. The dollar rose against the euro Friday after the Fitch ratings agency downgraded Greece’s debt three notches further into junk status, escalating worries about the European debt crisis.

In recent months, markets have fallen when the dollar rises against the euro because the stronger U.S. currency has signaled that European countries are still struggling to get their debt under control.

© Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


Thoughts and opinions on this story? Click here to comment >>

Get stories like this in a free daily email