Stocks Slide as Economic Worries Return
NEW YORK (TheStreet) -- U.S. stocks slumped Monday after domestic retail sales posted a surprise decline, falling for a third consecutive month.
Fresh concerns about the global economy were also stoked by the International Monetary Fund's reduction of its 2013 global growth forecast amid the protracted European debt crisis and by Chinese Premier Wen Jiabao's warning that momentum isn't yet in place for steady growth in China.
The Dow Jones Industrial Average fell 50 points, or 0.39%, to close at 12,727.
Within the Dow, 23 of the index's 30 components settled lower. The biggest percentage decliners were Alcoa (AA), Caterpillar (CAT), Coca-Cola (KO), Home Depot (HD) and JPMorgan Chase (JPM); all down more than 1%.Dow winners included American Express (AXP), Chevron (CVX) and Pfizer (PFE). The S&P 500 was slid 3 points, or 0.23%, to finish at 1354. The Nasdaq lost nearly 12 points, or 0.4%, at 2897. Friday's big rally helped both the Dow and S&P 500 finish in positive territory last week but it's worth noting that both indexes have now fallen in seven of the past eight sessions during the lull in corporate news before earnings season picks up. The headlines will pick up from here with three Dow components reporting results on Tuesday -- Coca-Cola, Intel (INTC) and Johnson & Johnson (JNJ) -- and Federal Reserve Chairman Ben Bernanke climbing Capitol Hill to give his semi-annual testimony on monetary policy to Congress. The big blow to sentiment on Monday was news that retail sales slipped 0.5% in June, falling short of the 0.2% increase that economists surveyed by Thomson Reuters were expecting. The decline followed a 0.2% dip in May. The data "marks a meaningful down-shift in household spending momentum, after the buoyancy seen in the past two years," said Millan Mulraine, senior U.S. strategist, TD Securities. "The general tone of this report was disappointing and it suggests that consumers are beginning to retrench spending in a meaningful way." Mulraine continued: "More importantly, with sales falling for the third consecutive month a trend of softening household spending is beginning to develop, and with confidence remaining weak and employment gains softening we expect personal expenditures to remain quite tepid, underscoring the softening economic outlook." Goldman Sachs economists called the report was "a negative" for their tracking estimate of second quarter gross domestic product growth, which they reduced by two tenths to 1.1%. Excluding the more volatile auto sales component, the Commerce Department said retail sales fell 0.4%, compared with the flat figure that economists were expecting, and after falling 0.4% the previous month.
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