US stocks mixed on profit-taking

Disappointing retail sales figures and an unexpected jump in unemployment claims prompted UA investors to take profits today, leaving stocks mixed despite another big drop in oil prices.

One day after crude oil futures posted their biggest decline since September 2001, oil prices again fell sharply. A barrel of light crude for January delivery settled at 43.25, down 2.24, on the New York Mercantile Exchange. Crude prices fell as low as 42.50 during the session.

However, stock investors were disappointed with November sales reports from the US retailers. A number of top retailers issued lower-than-expected sales reports as the holiday shopping season got under way. With two-thirds of the US economy powered by consumer spending, many investors hoped strong holiday spending would boost the economy through the end of the year.

“Obviously retail sales are a major concern going forward, but the falling oil prices will definitely help the market,” said Michael Sheldon, chief market strategist at Spencer Clarke LLC. “If we can stabilise around the 40 level, we’ll see a pretty good year-end rally in stocks.”

The Dow Jones industrial average fell 5.10, or 0.05%, to 10,585.12. The Dow climbed more than 162 points on Wednesday.

Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 index was down 1.03, or 0.09%, at 1,190.34, and the Nasdaq composite index gained 5.34, or 0.25%, to 2,143.57.

Investors were also nervous after the Labour Department reported a sharp rise in first-time unemployment claims, which climbed 25,000 to 349,000 last week. Wall Street expected an increase of just 7,000.

While unemployment generally remains low, the Labour Department figures, coming just one day before a major job creation report for November, were cause for concern on Wall Street.

“I think what you’re seeing here is a little bit of profit taking after a really impressive day yesterday, and the retail figures and unemployment are good triggers for that,” said Brian Williamson, equity trader at The Boston Company Asset Management.

“There’s no real big reason, nothing glaring, for this move to the downside, so we’re probably looking at some short-term asset allocation moves out of equities.”

Should jobs increase and oil prices continue to fall, more consumers could be drawn back to the stores, increasing investors’ confidence in stocks. However, it looks like this holiday season may continue to be lacklustre. With a mediocre start to shopping last weekend, many retailers have cut their sales and profit outlooks.

Wal-Mart Stores climbed 18 cents to 53 despite reporting November sales that rose just 0.7% in November, matching reduced expectations.

Other retailers saw their November sales fall compared to a year ago, including Pier 1 Imports, Federated Department Stores and Limited Brands, which operates Victoria’s Secret and Bath & Body Works. Pier 1 slumped 42 cents to 18.30, Federated lost 15 cents to 55.07 and Limited Brands was down 66 cents at 23.94.

A few retailers managed solid gains, led by JC Penney’s 12% rise in November sales from a year ago. American Eagle Outfitters and Bebe Stores also saw strong sales. JC Penney nevertheless fell 20 cents to 38.90, while American Eagle climbed 33 cents to 43.29 and Bebe gained 4 cents to 38.99.

The New York Times skidded 97 cents to 40.09 after the media company issued a reduced profit forecast for the fourth quarter, blaming poor advertising revenue for the lower expectations.

Dow Jones industrials component Intel slipped 39 cents to 22.71 as investors waited for the semiconductor giant’s mid-quarter update, due out after the session.

Microsoft shareholders received their 3-per-share dividend today, but although volume was strong, there was no notable increase in buying, according to strategists and floor traders. Microsoft fell 16 cents to 27.09 on better-than-average volume for the stock.

Declining issues outnumbered advancers by more than 4 to 3 on the New York Stock Exchange, where volume was heavy.

The Russell 2000 index of smaller companies was down 1.18, or 0.18%, at 642.51.