Coal Sector Tumbles On Grim Economic Results

DEBORAH JIAN LEE

NEW YORK (AP) — Coal stocks fell across the board Wednesday after a pileup of bleak economic news sent investors scurrying, worried that a reversal of the market's rally will translate to more pullback in demand for basic materials.

The Commerce Department on Wednesday said retail sales fell 0.4 percent last month, while economists had expected sales to be flat.

Investors watch these numbers closely because consumer spending accounts for about two-thirds of U.S. economic activity. This news signals a prolonged economic slowdown.

Investors received more glum news on the housing sector, another key focus of investor attention. A new report showed the number of U.S. households facing foreclosure jumped 32 percent in April, according to RealtyTrac Inc.

Argus Research analyst Bill Selesky cited the combination of these reports, along with an anticipated "market correction," as the potent cocktail that sent coal stocks tumbling.

The recent upswing in the market went "a little too far, too fast," Selesky said in a phone interview. As the market retreats, "a recovery will be postponed for farther out and I think that worries investors in the basic materials companies" because it means demand for their products will decline.