Arrow-right Camera
The Spokesman-Review Newspaper

The Spokesman-Review Newspaper The Spokesman-Review

Spokane, Washington  Est. May 19, 1883
Clear Night 14° Clear
News >  Business

Stocks fall on retailers’ weak forecasts

Associated Press The Spokesman-Review

NEW YORK – Stocks plunged Tuesday as investors, nervous about upcoming earnings reports, cringed at troubling forecasts from retailers Home Depot and Sears and at soaring oil prices. The Dow Jones industrial average fell more than 100 points.

The market seemed to be following the pattern of previous earnings seasons, turning lower as second-quarter reports had a rocky start. Home Depot Inc., Sears Holdings Corp. and homebuilder D.R. Horton Inc. offered dreary outlooks that suggested the sluggish housing market may dampen consumer spending.

The outlooks followed Monday’s news that aluminum producer Alcoa Inc.’s second-quarter sales missed estimates and that printer manufacturer Lexmark International Inc. slashed its second-quarter earnings forecast. Together, the reports dispirited investors who had been counting on corporate America’s performance giving a boost to the stock market, which has been stuttering in recent weeks.

“People are a little bit skittish about the health of the consumer,” said Jack Caffrey, equities strategist at J.P. Morgan Private Bank.

As the U.S. dollar tumbled and investors fled to the relative safety of Treasury bonds, the stock market dropped further after oil prices briefly spiked above $73 a barrel, raising concerns about Americans’ energy bills.

Wall Street often trades erratically amid profit warnings before the quarterly earnings flood. It weakened because of ratings agency Standard & Poor’s announcement that it might lower the credit rating of more than $12 billion in bonds backed by risky home loans. Such loans are sold by some of the nation’s largest banks.

According to preliminary calculations, the Dow fell 148.27, or 1.09 percent, to 13,501.70, near its low of the session.

Broader stock indicators also declined. The Standard & Poor’s 500 index fell 21.73, or 1.42 percent, to 1,510.12, while the Nasdaq composite index was off 30.86, or 1.16 percent, at 2,639.16.

Bond prices soared, pushing down the 10-year Treasury note’s yield to 5.03 percent from 5.16 percent late Monday. The plunge in yields failed to boost stocks, largely because the decrease was caused by worries about the housing market rather than confidence that inflation is easing.

A speech by Federal Reserve Chairman Ben Bernanke in Cambridge, Mass., did not offer much insight into the central bank’s next move, and instead focused on how the Fed makes its inflation-fighting decisions. Investors are curious whether the bank will raise interest rates later this year to rein in inflation, given soaring food and energy prices.

Crude oil futures climbed 62 cents to $72.81 a barrel on the New York Mercantile Exchange, after momentarily surpassing $73 a barrel, their highest point since late August.

The Spokesman-Review Newspaper

Local journalism is essential.

Give directly to The Spokesman-Review's Northwest Passages community forums series -- which helps to offset the costs of several reporter and editor positions at the newspaper -- by using the easy options below. Gifts processed in this system are not tax deductible, but are predominately used to help meet the local financial requirements needed to receive national matching-grant funds.

Active Person

Subscribe now to get breaking news alerts in your email inbox

Get breaking news delivered to your inbox as it happens.