Wal-Mart, AIG Drag on Stocks
Stocks declined, clipped by a quartet of dismal news: a rise in jobless claims, oil's resurgence, Wal-Mart's sales miss and AIG's wider-than-expected loss.
But a better-than-expected report on home sales helped shave a few points off the decline.
Existing-home sales rose 5.3 percent in June, the National Association of Realtors reported. It surpassed the 1-percent decline expected and was the highest reading since October. Such sales are now down 12.3 percent from June 2007.
Initial jobless claims rose by 7,000 last week to 455,000, the highest level in more than 6 years.
Oil prices jumped above $120 a barrelas geopolitical turmoil rekindled supply concerns.
AIG reported aloss of 51 cents a share, falling far short of analysts' estimates, which had projected a profit for the company. Sales also missed estimates and the insurance giant said it will unveil a sweeping restructuring plan at a meeting on Sept. 25.
Juy same-store sales have been trickling in all morning and have been largely disappointing -- even from the discount and teen retailers.
Wal-Mart's same-store sales rose 3 percent in July but fell short of the 3.4 percent expected.
Wal-Mart rival Target also missed its mark, reporting a decline of 1.2 percent when analysts had expected a more modest 0.3-percent drop.
Wal-Mart executives said the reason for the sales dropoff is that the boost from the government stimulus checks is starting to wane.
"With the end of the stimulus checks, we know consumers are spending more cautiously," said Eduardo Castro-Wright, head of Wal-Mart's U.S. operations.
Teen retailers, which are typically unfazed by downturns, started to show signs of wear. Pacific Sunwear said same-store sales fell 4 percent, hurt by weak sales of swimwear and accessories. Hot Topic sales fell 2.1 percent and Children's Place sales were flat.
Not surprisingly, department stores posted bigger-than-expected declines but J.C. Penney raised its second-quarter outlook, citing better-than-expected sales of reduced-price merchandise.
And bulk food and home goods continued to be a hit with shoppers: Wholesaler Costco reported itssame-store sales rose 10 percent, beating expectations.
On tap for later today is a report on consumer credit this afternoon.
In Europe markets rallied, led by resource and energy stocks, ahead of rate decisions from the European Central Bank and the Bank of England.
But global economic concerns pushed major indexes in Asia down.
Still to Come:
THURSDAY: Consumer credit
FRIDAY: Productivity; wholesale trade; Earnings from Berkshire Hathaway
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