Stocks were held back Tuesday by reports that U.S. companies barely increased their inventories in June. The slower restocking trend could act as a drag on overall economic growth. When businesses place fewer orders, factory production slows.
NEW YORK (AP) — Stocks closed mostly lower Tuesday after trading slightly higher for much of the day.
Earlier, investors were energized by a surprise gain in retail sales in July. That report provided evidence that American shoppers are still spending even as their counterparts in Europe and Asia slow down. U.S. retail sales rose in July by the largest amount in five months.
The Dow Jones industrial average closed up 2.71 points at 13,172.14. It was up as much as 53 points at midday. The broader S&P 500 index lost 0.18 point to 1,403.93 and the Nasdaq composite index fell 5.54 points to 3,016.98.
U.S. retail sales rose in July by the largest amount in five months as Americans spent more on cars, furniture and clothes. The 0.8 percent gain was better than analysts were expecting. It also suggested that U.S. consumers were starting to spend at stores after cutting back in the April to June period.
JJ Kinahan, a strategist at online broker TD Ameritrade, said the increase wasn’t enough to justify a significant upward move in the stock market.
“Consumers are still cautious,” Kinahan said. “Even numbers that are marginally better look good when compared to a trough.”
Investors sold low-risk assets, sending the yield on the benchmark 10-year Treasury note up to 1.73 percent from 1.66 percent late Monday.
Stocks were held back by reports that U.S. companies barely increased their inventories in June. The slower restocking trend could act as a drag on overall economic growth. When businesses place fewer orders, factory production slows.
“The data points to the fact that the economy is stabilizing at a lower level,” said Peter Cardillo, chief market economist at investment bank Rockwell Global Capital. “While the economy isn’t slipping further, it leaves open the possibility of the Fed’s support for the economy to grow at a better rate.”
Many economists believe the Federal Reserve will try to stimulate the economy by launching another program of buying government bonds and mortgage-backed securities to keep interest rates low. They will be closely watching Fed Chairman Ben Bernanke’s speech on Aug. 31 at an annual economic conference in Jackson Hole, Wyo.
Home Depot jumped $1.89 to $54.71. The world’s biggest home-improvement retailer posted a 12 percent jump in net income and increased its earnings forecast for the entire year. Home Depot’s fortunes are closely tied to the housing market, which has been improving. On Thursday, the Department of Commerce releases the housing starts and building permits report for July.
The number of declining stocks narrowly outpaced rising ones on the New York Stock Exchange. Trading volume was very light at 2.9 billion shares.
Among other stocks making big moves:
– Groupon plummeted 27 percent. The online coupon company’s stock closed at an all-time low of $5.51, down $2.04 after its sales growth fell short of expectations partly due to worsening conditions in Europe.
– Estee Lauder rose $5.12, or 9 percent, to $60.13. The beauty company, whose brands include MAC and Aveda, reported results that topped Wall Street expectations. The company also raised its revenue forecast for the year.
– NCR Corp. fell close to 10 percent following allegations that the ATM maker has violated sanctions and a federal corruption law by operating a subsidiary in Syria and working with blacklisted banks in the country. NCR’s stock was off $2.47at $22.65.