Stocks Struggle as Market Digests Consumer Reports

Stocks slipped into the red Friday after a report showed consumer sentiment softened in March.

The market had opened higher after an unexpected rise in the government's measure of retail sales for February, which provided a fresh vote of confidence on the recovery.

The Dow bobbed in and out of negative territory. American Expressled the pack, followed by McDonald's. DuPont rounded out the top three.

Disney and Pfizer and were at the bottom of the pack.

Bailout plays Citigroup and AIG were a mixed bag: Citi gave up its opening gains, while AIG was up more than 1 percent.

The government said retail sales grew 0.3 percent in February despite a drop in auto sales and crippling snowstorms that were expected to weigh on economic numbers for the month. Excluding auto sales, retail sales jumped 0.8 percent. Economists had expected retail sales to decline.

“This retail-sales number — something that people really had negative expectations for — especially with the weather that affected two different weekend days in February — and still coming out to the point that you really can’t bet against the American consumer right now,” Art Hogan, director of global equities at Jefferies, said on CNBC this morning. "I think the consumer has loosened up the purse strings and that continues to bode well for the balance of this year and that points us in the direction of a sustainable recovery," he said.

In other economic news, Reuters and the University of Michigan reported their consumer-sentiment index dropped to 72.5 in a mid-March reading from 73.6 at the end of February. Economists had expected the gauge to climb to 74.

The market briefly pulled back after the report but held on to a modest gain.

Business inventories were flat in January after a revised 0.3-percent drop in December. Economists had expected a 0.1-percent increase in the latest reading.

President Obama is expected to tap San Francisco Fed President Janet Yellen, a respected policy dove, for the post of vice chairman, essentially the No. 2 spot after Chairman Ben Bernanke. She will succeed Donald Kohn, a longtime Fed veteran, who is planning to retire in June.

On the M&A front, Norwegian fertilizer group Yara International said it won't raise its bid for rival Terra Industries , leaving the door open for CF Industries Holdings to buy Terra.

Asian stocks closed mixed as China is struggling to strike a monetary policy balance, while European shares were higher as production data from the euro zone showed the region may be in for a stronger-than-expected recovery.

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