- The Washington Times - Wednesday, April 13, 2005

NEW YORK (AP) — A sharp slide in oil prices wasn’t enough to keep stocks aloft yesterday as March retail sales fell short of expectations and investors grew apprehensive about weak consumer spending. The Dow Jones Industrial Average sank more than 100 points in the face of glum corporate outlooks and anxiety about first-quarter results.

Not only did the decline in fuel prices fail to lift stocks, but also the energy sector dropped 2.46 percent, making it one of the worst-performing segments of the market. The only sector to deliver a positive performance for the day was health care. This surprised some analysts because it suggested a shift away from the commodity-driven stocks that have been the market’s leaders. But few were alarmed by the pullback.

“The decline today reflected fear, really, of earnings announcements, and the weak retail sales. But the traditional ingredients for a bear market, I just don’t think, are in place yet,” said Ken Tower, chief market strategist for Schwab’s CyberTrader. “We’re looking at this as a bottoming process. Money is moving out of the energy sector into other areas, particularly the long-lost health care sector.”

The Dow closed down 104.04, or 0.99 percent, at 10,403.93.

The broader gauges also fell. The Standard & Poor’s 500 Index lost 13.97, or 1.18 percent, to 1,173.79. The Nasdaq Composite Index fell 31.03, or 1.55 percent, to 1,974.37.

Trading in the Treasury market also was choppy, partly because of a poorly received five-year note sale. The 10-year note declined slightly, and its yield rose to 4.37 percent, up from 4.36 percent late Tuesday. The U.S. dollar was mixed against other major currencies and gold prices rose.

Crude futures sagged after the International Energy Agency forecast slower growth in oil demand this year, and the U.S. Department of Energy reported a larger-than-expected build in fuel supplies. Light, sweet crude for May delivery shed $1.46 to $50.40 per barrel on the New York Mercantile Exchange. Analysts said the lack of a positive reaction in stocks suggests that investors might be skeptical about whether the declines will stick.

“I would’ve expected the market to act a little bit better based on what crude is doing,” said Todd Clark, head of listed equity trading at Wells Fargo Securities. “But with the retail numbers coming in lighter than expected, we’re starting to have evidence that higher gas and fuel prices are starting to crimp the consumer, and I think the fear is that that won’t change anytime soon.”

Retail sales rose by a modest 0.3 percent in March, according to the Commerce Department, the weakest showing since January, as the potential for an early Easter shopping rush was trumped by cold weather and higher fuel costs.

The hints of a drop-off in consumer spending were exacerbated by a disappointing outlook from Harley-Davidson Inc., which plunged 17 percent, or $9.84, to $48.93. The motorcycle manufacturer’s earnings beat estimates by a penny a share, but it cut its shipment and profit forecasts for the year because of weaker sales.

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