Dow Jones down 87 points

Disappointing retail sales data and a rise in oil prices pushed US stocks lower today as investors, once again worried about oil’s impact on consumer spending, took profits from the market’s July rally.

Many of the US retailers reported only modest sales gains as hot weather stifled demand for autumn fashions and as many consumers spent their money at car dealers instead of malls.

But investors nonetheless were wondering whether retailers’ results were a sign that consumers might finally be feeling the pinch from high petrol and energy prices.

Those concerns were exacerbated by another rise in crude oil futures, which once again neared all-time highs. A barrel of light crude settled at US$61.38 (€49.56), up 52 cents on the New York Mercantile Exchange.

However, with stocks still near four-year highs, analysts said the sell-off was unlikely the start of a major downward trend.

“I think you’re seeing some movement on the retail sales and oil, but I don’t think it’s meaningful,” said Kurt Wolfgruber, chief investment officer at Oppenheimer Funds. ”I still think this market will grudgingly go up.”

The Dow Jones industrial average fell 87.49, or 0.82%, to 10,610.10.

Broader stock indicators also moved lower. The Standard & Poor’s 500 index dropped 9.18, or 0.74%, to 1,235.86, and the Nasdaq composite index lost 25.49, or 1.15%, to close at 2,191.32.

Bonds traded in a narrow range, with the yield on the 10-year Treasury note rising to 4.32% from 4.30% late on Wednesday. The dollar was mixed against other major currencies, while gold prices rose.

The sales reports and oil worries overshadowed a positive employment report from the Labour Department. First-time jobless claims fell by 1,000 last week to 312,000. The news bodes well for Friday’s monthly job creation report. Economists expect the US economy to have created 186,000 jobs in July.

While the latest retail sales reports were not alarming – especially since they followed a robust June – there were enough companies reporting disappointing sales to keep investors on edge. Among those retailers whose sales fell below analysts’ estimates, Aeropostale tumbled 2.24 to 27.11, Limited Brands fell 68 cents to 24.35 and Pier 1 Imports was down 50 cents at 13.68.

But Wal-Mart Stores had better news, saying it expected its same-store sales to rise between 3% and 5% in August, the critical back-to-school shopping season.

It also confirmed a 4.4% rise in sales for June. Wal-Mart nonetheless dropped 39 cents to 49.29.

“Retail sales set the tone for the day, but we’ve had very little news otherwise,” said Brian Williamson, an equity trader at The Boston Company Asset Management. ”We’ve come off of the recent highs and that probably triggered some selling. Volume isn’t huge, though, so you can’t say there’s a lot of conviction behind this. Probably some profit-taking, some consolidation, and that’s it.”

In earnings news, Gillette dropped 75 cents to 52.20 after posting a 17% rise in second-quarter profits due to brisk sales of new products and cost cutting. Procter & Gamble, which is acquiring Gillette, lost 83 cents to 54.17.

Credit card issuer Metris lost 38 cents to 14.46 after it agreed to be purchased by banker HSBC Holdings PLC for US$1.59 bn (€1.28bn), or 15 per share excluding preferred shares. HSBC dropped 63 cents to 81.90 after announcing the move, the latest pairing of a major bank and a credit card issuer.

The two independent card issuers remaining made gains, with Capital One Financial Corp climbing 81 cents to 83.95 and American Express Co. gaining 37 cents to 55.85.

Exxon Mobil dropped 48 cents to 58.52 after the company said Chairman and Chief Executive Lee Raymond will retire at the end of this year. President Rex Tillerson is expected to be named Raymond’s successor in both posts.

Declining issues outnumbered advancers by more than 2 to 1 on the New York Stock Exchange, where volume was moderate.

The Russell 2000 index of smaller companies fell 11.54, or 1.69%, to 671.84.