Retail stocks helped push U.S. stock markets lower again Friday, a day after the biggest one-day drop in nearly two months, as evidence mounted showing consumers are becoming more cautious. Blue chip stocks had their worst week of the year.
The Dow Jones industrial average (^DJI) lost 30 points, or 0.2 percent to 15,081, the Standard & Poor's 500 index (^GPSC) surrendered 5 points, or 0.3 percent, to 1,655, and the Nasdaq composite index (^IXIC) edged down 3 points to 3,602.
Nordstrom (JWN) became the latest department store chain to post lower-than-expected second-quarter revenue as its same-store sales slipped, prompting it to lower its full-year sales and profit forecast. Shares fell 5 percent to $56.35.
Other retailers have disappointed investors with second-quarter earnings. From Walmart (WMT) and Gap (GPS) to Macy's (M) and McDonald's (MCD), chains that cater to middle- and lower-income Americans are feeling the pinch of an uneven economic recovery.
The retail industry is a closely watched part of the U.S. economy as consumer spending makes up roughly 70 percent of economic activity. The disappointing outlooks are worrisome because they take into account the back-to-school shopping season, typically the second-biggest shopping period for U.S. retailers.
Adding to the market's concern, a preliminary reading on consumer sentiment for August slipped from July's six-year high, according to a University of Michigan survey.
One bright spot was homebuilding stocks, which rallied after the Commerce Department reported housing starts rose 5.9 percent in July, compared with a 9.9 percent drop in June. Pulte Group and Lennar were among the top percentage gainers in the S&P 500. PulteGroup (PHM) rose 2.4 percent to $16.29 and Lennar (LEN) gained 1.9 to $33.91. But rival D.R. Horton (DHI) fell 0.7 percent.
Airline stocks gained some ground, with U.S. Airways (LCC) shares rising 1.8 percent to $16.01 but the sector is still lower for the week following a lawsuit from the Department of Justice to block the merger of US Airways and American Airlines.
PC-maker Dell (DELL) reported a 72 percent drop in its fiscal second-quarter earnings. That may help convince Dell shareholders to approve the $24.8 billion buyout proposed by founder Michael Dell and private-equity firm Silver Lake Partners. Dell shares rose 11 cents to $13.82 -- still below the proposed buyout price of $13.88 a share.
More Stocks in the News:
The Securities and Exchange Commission approved the proposed $8 billion sale of the venerable New York Stock Exchange to the much younger futures exchange, IntercontinentalExchange, or ICE. Shares of NYSE Euronext (NYX) -- parent of the NYSE -- rose 0.6 percent to $42.12, while ICE (ICE) rose 0.8 percent to end Friday trading at $181.83.
J.C. Penney (JCP) shares fell 3 percent to $13.41 as the retailer entered into an agreement with former board member and largest shareholder Bill Ackman, paving the way for him to sell his stake.
Shares of Applied Materials (AMAT) rose 1.9 percent to $15.62, even though the chip-making equipment company's earnings and outlook fell short of Wall Street estimates as analysts focused on its long-term outlook.
What to Watch Monday:
Urban Outfitters (URBN) reports corporate quarterly earnings.
-Compiled from staff and wire reports.