Stocks Mixed Despite Strong Retail Sales
Posted on: Thursday, 7 August 2003, 06:00 CDT
Stocks were mixed Thursday as Wall Street had a muted reaction to better-than-expected reports on retail sales and productivity. The market's lack of enthusiasm signaled that investors remain concerned that prices are too high given the uncertain economic recovery.
"We've had a lot of talk that in the second half of the year we'll finally see some big earnings and economics numbers," said Scott Wren, equity strategist for A.G. Edwards & Sons. "The reports today were pretty good, but there's still concern the second half won't pan out the way many people thought."
By late morning, the Dow Jones industrial average was up 19.05, or 0.2 percent, at 9,080.79.
The broader market was mixed. The Nasdaq composite index fell 5.82, or 0.4 percent, to 1,646.86. The Standard & Poor's 500 index rose 1.69, or 0.2 percent, to 968.77.
The Labor Department reported that business productivity grew at a surprisingly strong annual rate of 5.7 percent in the second quarter, the best showing since fall 2002. The reading was also an improvement from the 2.1 percent growth notched in the first quarter of this year.
In a separate report, the department said new jobless claims fell by a seasonally adjusted 3,000 to a six-month low of 390,000 for the work week ending Aug. 2. It was the third week in a row that claims stood below 400,000, a level associated with a tepid job market.
Stocks have been pressured in recent weeks by rising interest rates and investors' worries that the recent rally might have come too fast. Until investors see strong evidence of a solid economic recovery, gains will likely be limited, they said.
Retailing stocks advanced Thursday after a string of companies reported July sales exceeded Wall Street's expectations, due to warm weather and significant discounting.
Wal-Mart, which reported strong sales and raised its second-quarter earnings estimate, rose 86 cents to $56.60.
Kohl's gained 52 cents to $61.16, while Gap rose 33 cents to $18.04. Both companies also posted better-than-anticipated July sales.
Among the losers, Intel fell 11 cents to $24.03 after the Internal Revenue Service raised the chipmaker's tax liability by about $600 million following a review of the returns in 1999 and 2000.
Consumer lender Americredit dropped $1.51 to $6.29 after issuing a 2003 profit warning.
Declining issues narrowly outnumbered advancers on the New York Stock Exchange. Volume came to 414.86 million shares, compared with 412.93 million traded at the same point Wednesday.
The Russell 2000 index, a barometer of smaller company stocks, fell 2.34, or 0.5 percent, to 451.57.
Overseas, Japan's Nikkei stock average finished Thursday down 0.6 percent. In Europe, France's CAC-40 slipped 0.04 percent, Britain's FTSE 100 rose 0.2 percent and Germany's DAX index dropped 1.7 percent.
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