Dow, S&P 500 Retreat From Record Highs
NEW YORK (TheStreet) -- U.S. stocks were lower Wednesday after markets posted two days of record highs. A strong result for producer prices showed the threat of deflation fading as the U.S. economy recovers.
The Dow Jones Industrial Average was 0.61% lower at 16,613.97, while the S&P 500 was off 0.47% to 1,888.53. The Nasdaq fell 0.72% to 4,100.63.
Despite recent highs for the markets, traders have noted a lack of breadth in upswings, with few individual stocks hitting new highs.
- The producer price index rose 0.6% in April -- the most in over a year -- after an increase of 0.5% in March. Expectations were for a 0.2% result. The higher PPI showed the prospect of deflation fading as the economy improves.
- Stocks seeing price action Wednesday included Kate Spade (KATE), Macy's (M) and Cisco (CSCO). Kate Spade posted a profit of $46.2 million or 37 cents a share, against a loss of $52.2 million or 44 cents a share a year earlier. Shares jumped 8.5%. Macy's shares closed effectively unchanged as it reported a 9% increase in profit for the first quarter and increased its dividend by 25%.
- Cisco Systems after the closing bell on Wednesday reported a profit of 51 cents a share, beating Wall Street expectations of 48 cents a share. Shares were gaining more than 3% in after-hours trading.
- Deere (DE) said fiscal second-quarter earnings fell 9.5% on lower demand for farming equipment. Shares were off 2%.
- Sears (SHLD) reversed earlier gains after it said it is considering selling its Canadian operations, and is looking at strategic options for its 51% in Sears Canada. Sears shares dropped 5.9%.
- Fossil Group (FOSL) fell 10.3% after the accessories maker released forecasts below analysts' estimates.
- IBM (IBM) was one of the biggest losers in the Dow, off 1.8%.
- In international markets, Germany's DAX and the U.K. FTSE were broadly flat. The Hang Seng closed up 1.03% while the Nikkei was 0.14% lower.
- The U.K. jobless rate dropped to a five-year low of 6.8% in the three months to March, down from 6.9% in February. The Bank of England said that solid performance in the U.K. economy continued but more spare capacity needed to be absorbed before it would consider raising interest rates. Industrial production across the eurozone fell in March, down 0.3% from February and 0.1% from a year earlier.
- In the U.S., regulators are reconsidering their approach to mortgage lending amid concern that tight standards could hamper a housing recovery.
-- By Andrea Tse, Jane Searle and Joe Deaux in New York
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