Stocks fall on weak jobs report, Wal-Mart sales
NEW YORK -- Wall Street tumbled today after weekly unemployment claims jumped to a six-year high and Wal-Mart Stores Inc. and other retailers reported disappointing sales, touching off renewed fears that a pullback in consumer spending will damage the economy. The Dow Jones industrials fell about 140 points.
The Labor Department said the number of newly laid off people seeking jobless benefits increased by a seasonally adjusted 7,000 to 455,000 last week, the highest level since late March 2002. Wall Street had expected new claims to rise to around 430,000.
Wal-Mart, the world's largest retailer, said same-store sales, or stores open at least one year, rose 3 percent in July as consumers began using up their government stimulus checks. Analysts who follow the important measure of a retailer's health had expected a 3.4 percent rise, on average.
Financial stocks also lost ground after insurer American International Group Inc. reported that it lost more than $5 billion in the second quarter. The stock was by far the steepest decliner among the 30 that make up the Dow industrials.
Bill Stone, chief investment strategist for PNC Wealth Management, said the stream of economic news has been somewhat negative lately, short circuiting the market's attempts to build on rallies. Thursday's reports on employment and financials only added to investors list of worries, he said.
"The concerns about a weakening economy always run to worries about the financials and then you add some negative news to them on their own and you've got what we've got today," he said.
In midday trading, the Dow fell 139.39, or 1.20 percent, to 11,516.68. The decline follows a two-day rally in the Dow of more than 370 points following a drop in commodity prices and after the Federal Reserve assuaged some of the market's fears about the economy.
Broader indicators also fell Thursday. The Standard & Poor's 500 index fell 12.68, or 0.98 percent, to 1,276.51, and the Nasdaq composite index fell 8.79, or 0.37 percent, to 2,369.58.
Oil prices that fell sharply earlier in the week rebounded Thursday, likely adding to Wall Street's downbeat mood. Light, sweet crude rose $1.65 to $120.23 on the New York Mercantile Exchange.
Bonds rose as investors sought the protection of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its prices, fell to 4.00 percent from 4.05 percent late Wednesday. The dollar was lower against other major currencies, while gold prices rose.
