Market Update: Nasdaq Loses 2.2%, Dow Slips Almost 1%
(Updated from 4:11 p.m.)
Stocks ended the day lower as investors showed concern about the direction of the economy.
The
retail sales report for May -- released this morning -- was slightly weaker than expected, rising 0.1% for the month, compared with the 0.2% increase economists expected. But the government revised figures for April to reflect that retail sales had advanced 1.4% that month -- more than the preliminary reading of a 1.1% increase.
After being up earlier in the day, the major market indices closed in the red. The
Dow Jones Industrial Average closed down by 76.8 points, or 0.7%, to 10,871.6; the
Nasdaq Composite Index lost 48.3 points, or 2.2%, to 2121.6; the
S&P 500 index slipped 14.3 points, or 1.1%, to 1241.6; and the
Russell 2000, which tracks small-cap stocks, lost 1.8 points, or 0.4%, to 505.
Retail stocks closed modestly lower. The
S&P Retail Index
lost 0.6%. Among the stocks trading down were:
Wal-Mart
(WMT) - Get Report
, which slid 0.8% to $50.15, and
Kohl's
(KSS) - Get Report
, which lost 0.3% to $60.75, and
Home Depot
(HD) - Get Report
, which closed down by 1.2% to $50.51.
A lot of attention today was focused on
Kraft's
( KFT) IPO, the second-largest offering in history. So far, investors have processed the cheesemaker's deal well; 280 million shares priced at $31 each last night -- the high end of its range. The stock closed up slightly, higher by 0.8% to $31.25.
Some Wall Street watchers had said the earlier strength was building on Tuesday's late-stage rally in the face of
Nokia's
(NOK) - Get Report
weak financial outlook yesterday morning. "I am very impressed with the way the market has performed in the face of warnings, and I think it will continue to be able to do that," said Ray Hawkins, vice president of block trading at
J.P. Morgan
.
Over the past week, the market has contended with profit warnings from a wide swath of corporate America. Investors, who sent stocks up significantly from late March through early May based on hopes of an economic recovery, are now worried that a second-half turnaround is increasingly unlikely.
Bond prices rose yesterday on expectations of yet another interest-rate cut when the
Federal Reserve meets on June 26 and 27.
Fed fund futures, a good proxy for monetary policy, are fully priced for another 25 basis-point cut. Since the beginning of the year, the central bank has cut short-term interest rates five times, by 250 basis points. The benchmark 10-year
Treasury Note was most recently off 4/32 to 97 31/32, pushing its yield up to 5.268%.
Among sectors, gold, biotech and paper products stocks all gained today. Retail, semiconductor, transportation, networking, drug and oil stocks all were lower.
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