Stocks tumble on retail sales report, rise in oil
NEW YORK -- Wall Street tumbled for a second session today after a government report on retail sales and a jump in oil prices raised investors' concerns about consumers' ability to spend and feed economic growth. The Dow Jones industrial average fell about 175 points, bringing its two-day decline to more than 300.
The Commerce Department said retail sales slipped 0.1 percent as rising prices helped offset the effect of economic stimulus payments to U.S. households. Excluding a big drop in sales of automobiles, retail sales rose 0.4 percent. But even on that basis it was the weakest showing in five months.
Wall Street had expected sales to remain flat after a minor increase in June. The report followed a warning from department store bellwether Macy's Inc. that its full-year profits would fall short of expectations because of slower sales.
The retail numbers pointed to a consumer who remains wary about spending. And because consumers' spending accounts for more than two-thirds of the economy, the fear on Wall Street is that the nation is in for a prolonged period of slow or even no growth.
"We're definitely in fear mode in the market. This is a classic correction," said Rob Lutts, president and chief investment officer at Cabot Money Management in Salem, Mass. "You're going to get this sort of fear activity when there's very little conviction."
An advance in oil prices also tinged investor sentiment. Light, sweet crude rose $2.81 to $115.82 a barrel on the New York Mercantile Exchange after the government said U.S. crude supplies fell unexpectedly last week.
In midday morning trading, the Dow fell 175.62, or 1.51 percent, to 11,466.85 after losing just under 140 points on Tuesday.
Broader stock indicators also fell. The Standard & Poor's 500 index fell 14.11, or 1.09 percent, to 1,275.48, while the Nasdaq composite index fell 25.37, or 1.04 percent, to 2,405.24.
On Tuesday, stocks fell sharply on news from JPMorgan Chase & Co. and other financial companies that reminded investors that the credit crisis is still hurting the economy.
Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.91 percent from 3.90 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices rose.
