New York: US stocks tumbled on Wednesday as a gloomy retail sales report revived recent anxiety about the economy’s struggle and caused a broad sell-off that accelerated late in the session.
Sales at retailers fell for a second straight month in April, breaking a string of more upbeat reports that had suggested the economic slump was abating and fueling a two-month rally.
Investors sold off shares across the board. Retailers fell, led by a nearly 5% drop in Target, while manufacturers, home builders and commodity companies stumbled.
Retail activity is a closely followed indicator, as consumer spending accounts for roughly two-thirds of the US economy. Analysts had forecast no change or even a small increase in retail sales, excluding autos.
“You want to see the consumer be a strong part of the recovery and if retail sales lag, that calls into question whether we’re in a recovery yet and how sustainable that recovery is going to be,” said Richard Sparks, senior equities analyst at Schaeffer’s Investment Research in Cincinnati.
The Dow Jones industrial average fell 184.22 points, or 2.18%, to 8,284.89. The Standard & Poor’s 500 Index lost 24.43 points, or 2.69%, to 883.92. The Nasdaq Composite Index gave up 51.73 points, or 3.01%, to 1,664.19.
The session was a stumbling block for the market after an impressive run-up that has driven the S&P 500 sharply higher. The index remains up nearly 31% from the bear market low hit in early March, but it was the third straight day of declines for the S&P, making it the longest slump since the rally’s onset.
The S&P is off 5% from last Friday’s recovery peak.
Wednesday’s sell-off caused the S&P 500 to breach some key technical support, ending below 900 for the first time in over a week.
Shares of Wal-Mart, the world’s biggest retailer and a bellwether for the sector, fell 1.2% to $50.03, while Target lost 4.8% to $40.47. The S&P retail index fell 3.3%.
In more bad news for the retail sector, department-store operator Macy’s Inc said it expects sales to fall this year as consumers tighten their belts, while Liz Claiborne Inc reported a worse-than-expected loss.
Shares of Macy’s slid 6.7 percent to $11.52 and Liz Claiborne plummeted 26.2% to $4.26.
Shares of big manufacturers also got hurt, with 3M Co down 4.4% at $56.94 and United Technologies Corp off 3.5% at $50.61.The NYSE-listed companies ranked among the top drags on the Dow industrials.
Apple Inc, the iPod and iPhone maker and yet another company dependent on consumers opening their wallets, was off 4% at $119.49 on Nasdaq. Apple contributed the most to the Nasdaq’s decline.
Investors also pulled cash out of the financial sector, which has helped lead the recent rally, in favor of more defensive plays, such as drugmakers.
Dow components Merck & Co Inc added 2.8 percent to $25.67, while Pfizer Inc climbed 2.3% to $15.27. Both helped cushion the blue-chip average’s decline.
Shares of AMD rose 0.7% to $4.38 after EU regulators fined Intel Corp for antitrust violations and ordered it to halt illegal practices to squeeze out its rival. Intel eased 0.5% to $15.13.
Trading was active on the New York Stock Exchange, with about 1.77 billion shares changing hands, above last year’s estimated daily average of 1.49 billion, while on Nasdaq, about 2.37 billion shares traded, above last year’s daily average of 2.28 billion.