Stocks close lower after consumer spending slides

Traders work as the New York Stock Exchange nears clos­ing. JPMor­gan Chase blew away a cloud of con­cern hang­ing over the bank­ing indus­try Fri­day and set off a rally in stocks. (AP Photo/Bebeto Matthews)

BERNARD CONDON

AP Busi­ness Writer

NEW YORK — Stocks closed lower for the sev­enth day out of the last eight on Mon­day after the gov­ern­ment reported that U.S. con­sumers cut their spend­ing last month.

The news pushed stocks down from the start of the trad­ing day. Though they recov­ered a bit around mid­day, all three major indexes closed down. The Dow Jones indus­trial aver­age dropped 49.88 points, or 0.4 per­cent, to 12,727.21.

Before trad­ing opened, the Com­merce Depart­ment said retail sales fell 0.5 per­cent in June from the month before as Amer­i­cans spent less on autos, fur­ni­ture and appliances.

It was the third straight month of declin­ing sales, a wor­ri­some trend. The last time sales slumped for so long was in the fall of 2008, at the worst point of the global finan­cial crisis.

“The sum­mer soft patch is here, and it could be here a while,” said Randy Fred­er­ick, a man­ag­ing direc­tor at Charles Schwab, the stock bro­ker­age firm. “Con­sumers are belt-tightening.”

Also damp­en­ing spir­its, the Inter­na­tional Mon­e­tary Fund said it now fore­casts the global econ­omy to grow 3.9 per­cent in 2013, down from an ear­lier esti­mate of 4.1 percent.

The Stan­dard & Poor’s 500 index fell 3.14 points, or 0.23 per­cent, to 1,353.64. The Nas­daq com­pos­ite index fell 11.53 points, or 0.4 per­cent, to 2,896.94.

Com­pa­nies that rely heav­ily on con­sumer spend­ing were among the weak­est on the New York Stock Exchange. Home Depot fell 64 cents, or 1.2 per­cent, to $51.45. Lowe’s Cos. lost 92 cents, or 3.4 per­cent, to $25.80.

Indus­trial stocks also fell sharply. Gen­eral Elec­tric and Cater­pil­lar, a heavy equip­ment maker, each fell about 1 per­cent. GE lost 18 cents to $19.59. Cater­pil­lar lost 92 cents to $81.15, one of the biggest losses among the 30 stocks that make up the Dow average.

Com­ments from Chi­nese Pre­mier Wen Jiabao over the week­end also weighed on the mar­ket. Wen said his country’s econ­omy has not yet entered a recov­ery and “eco­nomic dif­fi­cul­ties may con­tinue for some time.” Some of the weak­ness in China comes from the debt cri­sis in Europe, which has crip­pled spend­ing on imported goods.

In the Trea­sury mar­ket, the yield on the bench­mark 10-year Trea­sury fell to 1.45 per­cent from 1.49 per­cent late Fri­day as investors sought the rel­a­tive safety of gov­ern­ment debt.

In Europe, bor­row­ing rates for Italy and Spain rose again, the lat­est sig­nal that bond investors are leery of the finances of those coun­tries. Stocks fell 2 per­cent in Spain and 0.4 per­cent in Italy. Bench­mark indexes in Ger­many and France were flat.

The U.S. cor­po­rate earn­ings sea­son resumes in earnest this week with reports from major com­pa­nies that cover a wide span of the econ­omy. On deck Tues­day are Harley-Davidson, Coca-Cola, Gold­man Sachs and John­son & John­son. Intel and Yahoo also report this week.

Other stocks mak­ing big moves included:

— Visa rose $3.06 to $127.15 and Mas­ter­Card rose $7.29 to $436.89. The two giant pay­ment pro­cess­ing com­pa­nies, along with major banks, set­tled a seven-year old law­suit with mer­chants over fees they charge when cus­tomers pay with credit cards.

— Par Phar­ma­ceu­ti­cal jumped $13.42 to $50. The generic drug maker agreed to be acquired for $1.84 bil­lion in cash by the pri­vate invest­ment firm TPG. The offer was a 37 per­cent pre­mium to Friday’s clos­ing price.

— Yahoo rose 34 cents in after-hours trad­ing to $15.98 after the com­pany named long­time Google exec­u­tive Marissa Mayer to be its next CEO. Mayer will be the fifth leader the strug­gling Inter­net pio­neer has had in the past five years.

Declin­ing stocks nar­rowly out­paced ris­ing ones. Vol­ume was light at 2.9 bil­lion shares.

Posted by AP News on Jul 16 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.