Wall St hit by economic, consumer jitters

Wall St hit by economic, consumer jitters
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First Published: Wed, Jun 17 2009. 08 33 AM IST
Updated: Wed, Jun 17 2009. 08 33 AM IST
New York: US stocks slipped on Tuesday as mixed economic data and Best Buy’s disappointing sales spurred worries about an anemic recovery.
After a three-month run that lifted the S&P 500 as much as 40% from 12-year lows, analysts said the economy needs to start showing real improvement to support optimism about a budding recovery.
A rebound in May housing starts pointed to some stabilization in that sector, but another government report showed industrial production had a steeper-than-expected slide last month.
Industrial production fell 1.1% in May, while capacity utilization, a measure of slack in the US economy, slumped to its lowest level on records dating back to 1967.
“It indicates that at a minimum, the market’s taking a breather and may be starting a meaningful correction,” said Hugh Johnson, chief investment officer of Johnson Illington Advisors in Albany, New York, concerning the market’s losses.
Best Buy Co Inc, the largest US consumer electronics retailer, posted weaker-than-expected sales in its first quarter and suggested earnings for the rest of the year would be worse than forecast. Its shares dropped 7.3% to $35.84. The S&P retail index tumbled 3.1%.
Indexes ended at session lows. The Dow Jones industrial average fell 107.46 points, or 1.25%, to 8,504.67. The Standard & Poor’s 500 Index lost 11.75 points, or 1.27%, to 911.97. The Nasdaq Composite Index was off 20.20 points, or 1.11%, to 1,796.18.
The S&P 500 is still up 34.8% from March’s 12-year closing low. Declines have been shallow and short-lived, but analysts are increasingly looking for a larger pullback.
Johnson said he expects a correction of around 10%.
Consumer discretionary and resource stocks were among the day’s biggest losers. After earlier boosting the market, materials and energy shares fell as the US dollar strengthened. Chevron was down 1.7% at $69.88.
Single-family housing starts rose 7.5% in May, the largest gain since January 2006, but analysts said that rising mortgage rates and high inventory are still headwinds for the sector at the heart of the financial crisis.
In other economic data, a smaller-than-expected rise in May’s overall Producer Price Index suggested inflation pressures were muted.
Shares of big industrial manufacturers, whose fortunes are closely tied to a growing economy, fell, with blue-chip 3M Co down 1.5% at $58.41.
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First Published: Wed, Jun 17 2009. 08 33 AM IST
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