US stocks fall on weak retail earnings
File photo shows an entrance to a Wall Street subway station in New York. Wall Street stocks Tuesday, May 20, 2014, slumped on a batch of mostly-disappointing retail earnings and after a US Federal Reserve official endorsed a speedier rise in benchmark interest rates than some expect. AP
NEW YORK—Wall Street stocks Tuesday slumped on a batch of mostly-disappointing retail earnings and after a US Federal Reserve official endorsed a speedier rise in benchmark interest rates than some expect.
The Dow Jones Industrial Average dropped 137.55 (0.83 percent) to 16,374.55.
The broad-based S&P 500 fell 12.25 (0.65 percent) to 1,872.83, while the tech-rich Nasdaq Composite Index lost 28.92 (0.70 percent) at 4,096.89.
The losses followed a barrage of earnings reports from retailers, most of which disappointed. Among the companies to fall specially far were Dick’s Sporting Goods (-18.0 percent) and Urban Outfitters (-8.8 percent).
Art Hogan, chief market strategist at Wunderlich Securities, also cited remarks from Charles Plosser, president of the Federal Reserve Bank of Philadelphia, who said business conditions could require the central bank to raise rates “sooner rather than later.”
Hogan said Plosser is regarded as a hawkish Fed member, but that his remarks pushed stocks lower on a “catalyst-light” day.
Dow member Home Depot said cold weather crimped sales in the first quarter even as it bumped up its full-year earnings forecast. Shares of the Dow component rose 1.9 percent.
Staples plunged 12.6 percent after reporting first-quarter earnings of 18 cents per share, three cents shy of analyst expectations. Part of the weakness was due to North American store closures over the last 12 months, which helped push sales 2.8 percent lower from last year’s level.
TJX Companies, which owns the retail chains TJ Maxx, Marshalls and others, fell 7.6 percent as first-quarter earnings and revenues missed expectations on a bigger-than-expected hit from unfavorable foreign exchange rates and disappointing sales.
General Motors announced it was recalling 2.4 million more vehicles in the US as the giant automaker continues to address safety issues amid the faulty ignition recall scandal.
The latest recall will double to $400 million the extra accounting charges the company records for recall costs. GM shares sank 3.5 percent.
Dow component Caterpillar reported that April machine sales tumbled 13 percent. Bank of America Merrill Lynch rated the statistic as “disappointing but not entirely surprising” given weakness in the mining sector. Shares lost 3.6 percent.
Bond prices were mixed. The yield on the 10-year US Treasury fell to 2.51 percent from 2.54 percent Monday, while the 30-year held steady at 3.38 percent. Bond prices and yields move inversely.
