Stocks Fall Despite Good Data

Stocks tumbled Thursday, seemingly ignoring good economic news and a plunge in oil prices, as some traders focused on a profit warning from Wal-Mart Stores and continuing concerns about financial losses at hedge funds.

In other trading, Treasury bond yields dropped as some investors fled stocks for bonds. The dollar rallied briskly.

The Dow Jones industrial average slumped 110.77 points, or 1.1%, to 10,189.48, and most broader indexes also lost between 1% and 1.5%. Commodity-related stocks led the sell-off, but losers topped winners by more than 2 to 1 on the New York Stock Exchange.

Analysts said the cross currents buffeting markets made it difficult to pin the day’s trends on a single overriding concern.

Given recent worries that the economy had hit a “soft patch,” the government’s report that retail sales surged 1.4% in April might have been expected to bolster stocks.

But the news may have been offset by Wal-Mart’s report of a profit shortfall in the first quarter, and its warning that results in the current quarter also are likely to be below expectations.

Wal-Mart in part blamed higher gasoline prices for weak spending by its customers. Yet gas prices could be poised to slide: Near-term crude oil futures on Thursday fell $1.91 to $48.54 a barrel -- the lowest since Feb. 18.

“Wal-Mart is overshadowing it, but the fact remains the economic news is good. It indicates that the mild slowdown in economic activity we’ve seen is probably going to be short lived,” said Peter Cardillo, chief strategist at investment firm S.W. Bach & Co.

A stronger economy, however, could cause other worries on Wall Street -- for example, that the Federal Reserve would get more aggressive in raising short-term interest rates, analysts said.

Investors in recent weeks have been more focused on the risks inherent in higher interest rates. Rumors have been rife that some hedge funds have been hammered by certain trading strategies that go awry when rates rise in the corporate bond market.

Concerns about a possible domino effect in the financial system from hedge fund losses helped drive stocks lower Tuesday, and were evident again Thursday, analysts said.

Those concerns may have helped the Treasury bond market, as investors sought securities that are considered relatively safe. The government sold $14 billion in 10-year T-notes at a yield of 4.22%. Amid strong demand, the yield on the existing 10-year note dropped to 4.17% from 4.20% on Wednesday.

In currency trading the dollar jumped, taking its cue from the robust retail sales report that signaled better times for the economy. The euro slid to a six-month low of $1.27 from $1.281; the dollar rose to 106.72 yen from 105.74.

Some investors said the stock market’s failure to rally Thursday, given the oil news in particular, was a black eye for the bullish case, at least in the near term.

“It’s clear that the economy is growing, and it’s growing in a way you’d hope it would be in this point in the cycle,” said Hans Olsen, chief investment officer at Bingham Legg Advisers in Boston. “The economy is throwing a party and the stock market’s not attending.”

Among the day’s highlights:

* The Standard & Poor’s 500 slid 11.75 points, or 1%, to 1,159.36. Indexes of smaller stocks fell more sharply. The S&P; small-cap index lost 4.13 points, or 1.3%, to 307.60.

The technology-dominated Nasdaq composite held up better than its peers, losing 7.67 points, or 0.4%, to 1,963.88.

* Energy stocks suffered some of their steepest losses this year as oil prices fell. Exxon Mobil slid $2.47 to $54.82, ConocoPhillips tumbled $5.04 to $100.32, Anadarko lost $2.98 to $69.98 and Murphy Oil was off $3.24 to $87.42.

* Other commodity-related stocks also plummeted. Among mining firms, Phelps Dodge dropped $5.10 to $81.69, Noranda lost $1.40 to $16.54 and Cleveland-Cliffs sank $4.58 to $53.67.

In the steel sector, U.S. Steel fell $3.12 to $38.98 and Nucor was off $2.97 to $48.91.

* Gold fell as the dollar rallied. Near-term gold futures sank $5.60 to $421.60 an ounce in New York. The decline slammed gold mining stocks including Barrick Gold, which lost 78 cents to $21.74.

* Wal-Mart gave up 95 cents to $47.65 after its profit report. Also in the retail sector, Best Buy fell $1.15 to $50.73, J.C. Penney dropped $1.06 to $47.71 and Abercrombie & Fitch lost $1.57 to $57.09.

* Brokerage stocks fell on renewed concerns about hedge fund losses, because many Wall Street firms have ties to the funds. Goldman Sachs slid $3.53 to $100.22 and Bear Stearns dropped $2.51 to $93.09.

* Trucking stocks were lower despite falling oil prices. Yellow Roadway slumped $3.10 to $49.79.

* Warner Music Group fell for a second day after its initial public offering at $17 a share Wednesday. The stock eased 30 cents to $16.10.

* On the plus side, some tech stocks gained ground even as most other shares fell. Semiconductor stocks showed strength: Texas Instruments added 22 cents to $26.32 and Intel was up 7 cents to $24.84.

* Some consumer products also provided refuge. Clorox rose 50 cents to $57.75; Avon Products was up 13 cents to $38.95.