Stocks Drift to Modest Losses

Stocks lacked direction Friday as data showed both consumer prices and retail sales grew as expected. Gregg Greenberg has The Real Story.
Author:
Publish date:

NEW YORK (

TheStreet

) -- Stocks posted modest losses Friday after spending the day clinging to the flat line, as investors churned through a mixed slate of economic data showing higher consumer prices and retail sales in July and a slightly better consumer temperament in August.

The

Dow Jones Industrial Average

fell 17 points, or 0.2%, to 10,303. The

S&P 500

dropped 4 points, or 0.4%, at 1079, and the

Nasdaq

shed 17 points, or 0.8%, to 2173.

For the week, each of the major market averages lost ground, led by a steep 5% drop on the Nasdaq. The S&P 500 fell off 3.8%, while the Dow tumbled 3.3% since last Friday's close.

Jeffrey Kleintop, chief market strategist at LPL Financial, said the market is worried about the stall in retail sales over the past two months and "only a 2-point jump in sentiment is not enough with the back-to-school season on us."

"The data paints of picture of an uncertain consumer, that keeps the issue of whether this is a double-dip recession or not on the top of mind for investors," Kleintop continued. "We're now getting into back-to-school. If we see data

from International Council of Shopping Centers on Tuesday pick up, that could provide a little bit of relief around an increasing gloomy consumer outlook."

The

eurozone saw better-than-expected economic growth of 1% in the second quarter as Germany saw activity jump at the strongest pace in two decades.

Overseas, Hong Kong's Hang Seng dropped 0.2%, while Japan's Nikkei increased 0.4%. The FTSE in London added 0.2%, and the DAX in Frankfurt fell 0.4%.

>>The Economy

>>Company News

>>Commodities and the Dollar

>>Treasuries

The Economy

Consumer prices strengthened 0.3% in July and the core rate, which excludes volatile food and energy costs, rose 0.1% in July, according to the Labor Department's CPI index. Economists had been expected prices to inch 0.2% higher while the core rate rose as expected, according to estimates on

Briefing.com

.

July retail sales increased 0.4% in July, which was just below the 0.5% uptick that economists had been projecting. Excluding autos, July retail sales rose 0.2%, as expected, according to Briefing.com.

The University of Michigan released its consumer sentiment index for August in the morning, saying the group's temperament gauge improved to 69.6. Economists were anticipating a reading of 70 after July's level of 67.80, according to Briefing.com.

Business inventories, which were projected to rise 0.2% in June according to Briefing.com, instead increased by 0.3% during the month. May's growth was also revised higher to reflect a 0.2% advance instead of the 0.1% increase originally reported.

Kansas City Fed

President Thomas Hoenig gave voice to his concerns about keeping interest rates at record lows for too long during a speech in Lincoln, Neb., according to a report from

The Associated Press.

Though low rates are necessary in the near-term, the official also expressed worry that leaving rates low for too long could lead to future problems like economic bubbles. Hoenig has been a repeat dissenter from recent policy statements issued by the

Federal Open Market Committee

, in which he suggested it was no longer necessary to use the "extended period" language in describing the length of the current rate policy.

>>Overview

>>Company News

>>Commodities and the Dollar

>>Treasuries

Company News

Shares of

Intel

(INTC) - Get Report

,

DuPont

(DD) - Get Report

and

Home Depot

(HD) - Get Report

were the biggest drags on the Dow today. But more upbeat moves by

Bank of America

(BAC) - Get Report

,

Travelers

(TRV) - Get Report

and

Hewlett-Packard

(HPQ) - Get Report

, the blue chip average's top gainers, helped stem further losses.

Though Hewlett-Packard shares appeared to be recouping some losses in Friday's session a week after reports began to circulate about

CEO Mark Hurd's sudden departure, H-P itself continued to make headlines. The tech giant is said to be under a

bribery investigation by the Department of Justice, according to the

Wall Street Journal

. Shares gained 0.7% at $40.43.

Dynegy

(DYN)

agreed to be taken private by the

Blackstone Group

(BX) - Get Report

in a deal valued at $4.7 billion, which includes existing debt. As part of the privatization, Blackstone is selling four natural-gas plants to

NRG Energy

(NRG) - Get Report

for $1.36 billion. Dynegy shares soared 63.3% to $4.54. NRG Energy's stock, meanwhile, traded 2.1% lower at $21.95.

IBM

(IBM) - Get Report

is buying marketing software company

Unica

(UNCA)

for $480 million, as the tech heavyweight aims to bolster its enterprise software efforts. Shares of Unica skyrocketed over 118%, to $20.84 while IBM's stock shed 0.3% to $127.87.

Blockbuster

, the beleaguered video and game rental company, got another extension in its debt payment, which was due on Friday.

India, which is considering shutting down certain features of

Research In Motion's

(RIMM)

BlackBerry services on security grounds, may begin targeting other communication services, including those of

Google

(GOOG) - Get Report

and Skype, which is partly owned by

EBAY

(EBAY) - Get Report

. RIMM's stock dropped 1.4%, to $53.40.

Elsewhere in the tech realm,

Oracle

(ORCL) - Get Report

brought a property infringement lawsuit against Google, alleging Google infringed on patents by using Java applications in its Android operating system. Oracle shares slipped 1.2% to $22.66, while Google lost 1.2% to finish at $486.35.

BP

(BP) - Get Report

may find out as early as Friday if its broken oil well in the Gulf of Mexico has been permanently sealed. Shares of BP traded 1.6% higher to $38.98.

In earnings news,

J.C. Penney

(JCP) - Get Report

swung to a profit in the second quarter, beating profit estimates by a penny, but issued a lukewarm outlook for the remainder of 2010. The stock shed 4.7%, to $19.83.

Shares for fellow retailer

Dillard's

(DDS) - Get Report

dropped 5.1% to $19.85 after missing Wall Street projections. Dillard's earned an adjusted 7 cents a share, below consensus estimates for 12 cents a share, though still better than the loss posted in the year-earlier period, according to Briefing.com.

Cosi

(COSI)

also swung to a profit in its most recently completed quarter. But restaurant chain also said revenues dropped over 6%. Shares were weak, down 1.8% at 80 cents.

According to a MarketWatch report,

Citigroup

(C) - Get Report

is looking to beef up its ranks in Asia with plans to add at least 130 positions. Citigroup added 0.3% to $3.88 today.

>>Overview

>>The Economy

>>Commodities and the Dollar

>>Treasuries

Commodities and the Dollar

Crude oil for September delivery lost 35 cents to settle at $75.39 a barrel.

Elsewhere in commodity markets, the December gold contract shed 10 cents to finish at $1,216.60 an ounce.

The dollar was trading higher against a basket of currencies, with the dollar index up by 0.4%.

>>Overview

>>The Economy

>>Company News

>>Treasuries

Treasuries

The benchmark 10-year Treasury was up by 18/32, lowering the yield to 2.682%.

The two-year note was higher by 1/32, diluting yield to 0.533%. The 30-year bond was up by 1 19/32, weakening the yield to 3.872%.

--Written by Melinda Peer and Sung Moss in New York

.

>>Overview

>>The Economy

>>Company News

>>Commodities and the Dollar

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.