Market Update: Nasdaq Loses 2.2%, Dow Slips Almost 1% - TheStreet

(Updated from 4:11 p.m.)

Stocks ended the day lower as investors showed concern about the direction of the economy.


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:


(WMT) - Get Report

, which slid 0.8% to $50.15, and


(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


( 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


(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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