By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- The U.S. stock market had its worst
day in five weeks Thursday, as investors turned risk-averse amid
concerns of stalling growth in the euro zone and mixed domestic
economic data, including reports on housing and industrial
production.
Reflecting this flight to safety, U.S., U.K. and German
government bonds rallied, with 10-year Treasury yields falling to
2.5%.
The S&P 500 (SPX) fell 17.68 points, or 0.9%, to 1,870.85.
The Dow Jones Industrial Average (DJI) dropped more than 200 points
at one point and closed off session lows, down 167.16 points, or
1%, to 16,446.81. The Nasdaq Composite (RIXF) ended the day down
31.33 points, or 0.8%, at 4,069.29.
The Russell 2000 (RUT) index of small stocks recovered some of
the worst losses and closed 7.15 points, or 0.7%, lower at
1,095.99. The index briefly entered correction territory. At its
session lows, it was down 10% from the closing high of 1,208.65,
reached on March 4.
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action.
"Today's falling prices have more to do with the weak economic
data out of Europe. The picture there is so bleak that the
Germany's Bundesbank is signalling underwriting monetary stimulus,"
said Timothy Leach, chief investment officer, at U.S. Bank Wealth
Management Group.
"Our own economy is improving but very slowly. Combine that with
continued tapering and it is not surprising that markets have moved
sideways this year," he added.
Data on euro-zone first-quarter GDP growth rattled investor
nerves after coming in at a rate of 0.2%, below the expected
0.4%.
Domestic economic reports were mixed. Data on jobless claims and
regional manufacturing were generally positive, while housing and
industrial production data disappointed investors. First take:
economy improving faster than markets and Fed believe.
Consumer prices in April posted the biggest increase since last
summer as the cost of many staples rose, making it harder for
Americans to stretch their paychecks to pay for typical household
expenses.
Applications for weekly unemployment benefits fell sharply for
the second straight week, touching the lowest level since May 2007,
but at least part of the drop probably stemmed from seasonal quirks
tied to a late Easter holiday.
Manufacturers in the New York region said business improved
markedly in early May, suggesting a bounce in activity has finally
arrived. The Philadelphia Fed's manufacturing index retreated
slightly, but not as much as forecast by analysts.
Industrial production dropped in April, as utilities output
tumbled during the month.
Home builders are the most pessimistic they've been in a year,
with makers of new single-family homes reporting fewer sales.
Wal-Mart, Kohl's drop after earnings miss
Retailer company stocks were in focus amid earnings results.
J.C. Penney Co. Inc. (JCP), shares soared in aftermarket action,
rallying 18% after same-store sales beat estimates.
Also reporting after the close, Nordstrom Inc. (JWN)posted
earnings above analysts estimates. Shares surged 8.4% in
aftermarket action.
Wal-Mart (WMT) shares fell 2.4% after the company's
first-quarter profit and sales missed expectations.
Shares of Kohl's Corp. (KSS) fell 3.4% after the retailer's
financial results came in below expectations.
Macy's (M), which reported on Wednesday, fell 1.3%.
Shares of Cisco Systems Inc. (CSCO) were up 6% after the
computer equipment giant topped Wall Street estimates for earnings
and sales.
Shares of ExOne Co. (XONE) fell 17% after the 3-D printer
company posted a first-quarter loss that was bigger than analysts
expected.
European stocks slip
European stocks slipped in the wake of lower-than-expected GDP
data. Growth in Japan, meanwhile, outstripped expectations as the
economy expanded by a robust 5.9% rate in the first quarter. But a
stronger yen pulled Japanese stocks lower, leaving the Nikkei
Average down 0.8%. The Shanghai Composite fell 1.1%. China's
cabinet announced several measures on Thursday to "boost and
stabilize" the country's foreign trade.
Across other markets, crude for June delivery (CLM4) eased 87
cents to $101.50 a barrel, while gold for June delivery (GCM4) was
down $12.30 at $1,293.60 an ounce. The ICE dollar index (DXY)
showed the dollar falling against a basket of six rivals, to 80.05
from 80.060 in late North American trading on Wednesday.
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