Dow drops nearly 250 points on troubling sales, unemployment news
Retailers report lackluster back-to-school sales, while news jobless claims jumped unexpectedly.
NEW YORK -- A disappointing back-to-school shopping season and troubling unemployment data combined to drive the stock market down early today, as investors got a fresh reminder that the economic picture remains turbulent despite the recent reprieve in energy prices.
The Dow Jones industrial average sagged almost 250 points after retailers reported generally lackluster sales and new jobless claims jumped unexpectedly.
Though sales at Wal-Mart Stores Inc. were better than expected, results were down at competitors such as Gap Inc. and Target Corp. Wal-Mart shares were up 1.1%, but Gap was off 2.7% and Target was down fractionally.
Investors interpreted the jobs data as a sign that the government's closely watched monthly unemployment reading, to be released Friday morning, will fall for an eighth consecutive month.
Stocks staged a modest rally last month as investors hoped that declines in crude-oil and other commodity prices would prop up the spending of cash-strapped consumers. But the thinking on Wall Street has shifted lately, as investors now worry that falling commodity prices are punctuating a global economic slowdown that will further punish U.S. consumers and businesses.
As of 8:30 a.m. PDT, the Dow had sunk 249.96 points, or 2.2%, to 11,282.92. The Standard & Poor's 500 index and Nasdaq composite index each slipped 2%.
All 10 S&P 500 industry groups were lower, led by materials with a 3.3% decline and energy and financials, each of which were down 2.7%.
U.S. Steel fell 4.5%, Freeport-McMoran Copper & Gold slumped 5.1% and Weyerhaeuser was off 3.6%.
walter.hamilton@latimes.com
