Stocks Fall as Macy's Cuts Send Jitters Through Market
NEW YORK ( TheStreet) -- U.S. stocks dropped Wednesday as Macy's (M) tumbled after the retail bellwether cut its full-year guidance on indications of sluggish consumer confidence and a mixed economic picture fueled uncertainty about the Federal Reserve's plans for its massive stimulus program.
Macy's (M) stumbled 4.5% to $46.33 after the department store chain slashed its full-year earnings and comparable sales guidance and posted second-quarter earnings of 72 cents a share on revenue of $6.07 billion, which missed the average analyst earnings estimate of 78 cents per share on sales of $6.26 billion, driven by consumers' continued worries about spending on discretionary items given the uncertainty of the economic environment.
"The market is stuck where it is, and probably rightfully so, but we don't see where the market could move a whole lot higher for the rest of the year," said Ron Weiner, president of RDM Financial Group, which manages $650 million.United Parcel Service (UPS) shares slipped 0.3% to $87.45 after a UPS cargo plane crashed and exploded early Wednesday morning while approaching Birmingham-Shuttlesworth International Airport. U.S. Airways (LCC), Delta Air Lines (DAL), United Continental (UAL) and AMR (AAMRQ.PK) also weighed on the market, slipping after analysts at JPMorgan slashed their views on these airline stocks to "neutral" on worries that the outlook for the airline industry is being threatened by the government's move to prevent the merger of AMR and U.S. Airways. TripAdvisor (TRIP) was the worst performer on the S&P 500 after CEO Steve Kaufer said at the Canaccord investment conference that summer traffic has come in below the company's expectations on weaker seasonal travel. Shares dropped 9.2% to $73.55. Newmont Mining (NEM) was the top percentage gainer on the S&P for the second time this week as gold prices received another boost on mounting evidence that the Federal Reserve may not start to taper its monetary stimulus in September. Shares popped 6.2% to $31.94. St. Louis Fed Bank President James Bullard said in a speech on Wednesday that October may be a "more practical" move for tapering, according to Jefferies economist Thomas Simons in a note to clients. Inflation numbers looked subdued in July, the Bureau of Labor Statistics reported Wednesday. The producer price index (PPI) for last month came in flat vs. the expected rise of 0.3%. That's down from 0.8% in June. The core PPI stripping out food and energy costs came in up 0.1%, below the predicted 0.2% increase and the advance of 0.2% in the prior month. "It's completely consistent with the broad pattern of nothing much happening to producer prices," said David Levy, chairman of The Jerome Levy Forecasting Center. "We've been stuck in a 1.5% inflation for core producer prices; not a whole lot different from that of consumer prices." Meanwhile the Mortgage Bankers Association's purchase applications index continued to point to weakness in home sales in the week of Aug. 10, adding to the three-month decline in the purchase applications index that has occurred amid rising rates. The report showed a of drop of 5% for last week. The benchmark 10-year Treasury was rising 3/32, diluting the yield to 2.715%. Follow @atwtse -- Written by Andrea Tse and Joe Deaux in New York >To contact the writer of this article, click here: Andrea Tse.>
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