Sluggish retail sales reports gave investors more incentive Thursday to cash in profits from Wall Street’s recent rally and send stocks lower for a second consecutive session.
For the first time in a week, the Dow industrials fell below 8,500, and the Nasdaq composite dropped below 1,500.
In other trading, Treasury bond yields fell at the start of the day, then rebounded amid weak demand for new 10-year notes. Gold zoomed as the dollar slumped against the euro.
Stock investors were troubled by uninspiring April sales reports from major retailers and by the government’s report that new claims for jobless benefits last week remained at a high level, suggesting a weak economy.
The Dow fell 69.41 points, or 0.8%, to 8,491.22. The Standard & Poor’s 500 index slid 9.35 points, or 1%, to 920.27.
The technology-laden Nasdaq index declined 17.07 points, or 1.1%, to 1,489.69.
Losers outnumbered winners by about 9 to 7 on the New York Stock Exchange and by 3 to 2 on Nasdaq in active trading.
Still, analysts said the mood on Wall Street remained upbeat despite two days of losses. They said profit taking was expected after the market’s recent winning streak.
“It seems to be an orderly thing -- no dash for the exits. So far, so good,” said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co.
Among major U.S. retail chains, Wal-Mart Stores, Target, J.C. Penney and Sears Roebuck all missed their sales targets for April, and several retailers forecast weak quarterly earnings.
“You have to be concerned that the consumer, who’s been the pillar of strength of the economy, may be tiring,” said Peter Dunay, chief market strategist at Wall Street Access. “They’re tiring because they’re worried about unemployment, so they’re starting to trim their spending.”
Treasury Secretary John W. Snow added to the downbeat mood, saying the United States was experiencing a wobbly recovery as weak global expansion sapped domestic growth. Snow also said he was worried about weak growth in Japan and Europe, noting that was a damper on U.S. growth.
Treasury bond yields fell early in the day on the economic news. The 10-year T-note yield dropped to 3.62% from 3.68% on Wednesday, edging closer to the generational low of 3.56% reached in March.
But yields rose back to Wednesday’s levels, or slightly above them, after the government auctioned $18 billion in new 10-year notes at 3.7%. Traders said demand was the weakest for any 10-year auction since at least 1983.
Elsewhere, crude oil futures for June delivery gained 75 cents to $26.98 a barrel in New York after U.S. crude inventories fell and the media reported an explosion on a U.S. warship in the Middle East.
Near-term gold futures jumped $6.50 to $348.40 an ounce, the highest since March 11, as the dollar continued to weaken against key rivals. The metal is seen as an alternative to holding dollars.
In other highlights:
* Among retailers, Wal-Mart slipped 7 cents to $55.01, Sears lost 54 cents to $27.46, and J.C. Penney fell 28 cents to $17.32. But Target gained 61 cents to $34.78, and Gap, which reported a 20% gain in April sales, rose 68 cents to $17.28.
* Pixar tumbled $2.64 to $56.77 after the animation company cut its second-quarter earnings estimate to less than half of what Wall Street was expecting.
* Energy company Reliant Resources fell 49 cents to $5.22 after reporting a first-quarter loss of 9 cents a share, 2 cents more than analysts predicted.
* Cephalon, which makes drugs to treat nervous system disorders, dropped $3.63 to $38.65 after the company said first-quarter sales failed to meet analyst expectations.
* In foreign trading, Mexico’s market was slammed by profit taking. The IPC index tumbled 166.67 points, or 2.5%, to 6,408.62. It is up 4.6% year to date.
Market Roundup, C6-7