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US stocks drops on unxpected fall in retail sales

15 April 2009 07:55 (UTC +04:00)

Baku - APA-Economics. U.S. stocks fell at the open after data showed an unexpected drop in retail sales in March, further offsetting cheer in the financial sector as Goldman Sachs Group blasted past earnings estimates.
The Commerce Department reported retail sales fell 1.1% last month, with the results proving weaker than expected. Separately, the Labor Department reported inflation at the wholesale level fell more sharply than anticipated in March.
The Dow Jones Industrial Average shed 113 points at open to 7944. The S&P 500 fell 11 points, while the Nasdaq 100 declined 12 points.
U.S. stocks edged higher on Monday, with the S&P 500 adding 2 points and the Nasdaq Composite rising nearly 1 point, while the Dow Jones Industrial Average dropped 25 points on concerns the government would push General Motors into a bankruptcy filing and on concerns over Boeing’s profits.
After Monday’s close, Goldman Sachs announced a $5 billion stock offering to help repay funds issued by the government and also reported a $1.8 billion profit for the January-to-March period. Goldman also reported a loss in December as it shifted its reporting months.
"The current interest rate environment remains beneficial for investment banks that generally have a high proportion of funding that reprices relatively quickly," said analysts at FBR Capital Markets.
Goldman shares fell 5.6%, but other financials advanced, as Citigroup Inc. rose 9.5% and Bank Of America Corp. rose 1%.
Outside of financials, Johnson & Johnson reported a 2.5% profit decline but held onto its 2009 outlook. J&J shares edged up more than 1%.
After the close, microchip giant Intel Corp. and railroad firm CSX Corp., report results.
J.P. Morgan Chase & Co.’s European strategists said the broader market is likely to be under pressure in the short term as first-quarter reporting season will produce a reality check, with sequential earnings per share falls and still too-optimistic consensus expectations.
But the strategists were more optimistic longer term as the monetary transmission mechanism is restarting, economic indicators are troughing and valuations are attractive relative to bonds.
International stocks generally were strong, with the S&P/ASX 200 up 2.7% in Australia and the Hang Seng up 3.6% in Hong Kong.
In Europe, banks led an advance after a four-day break, with the pan-European Dow Jones Stoxx 600 up 1.5% and the FTSE 100 adding 0.2% in London.
The dollar was stronger vs. the euro and weaker vs. the Japanese yen, while oil futures fell 46 cents a barrel.
Yields on 10-year Treasury bonds slipped 4 basis points to 2.82%. Yields move in the opposite direction to prices. Source: AP