Stocks open lower on bad retail sales

By Richard C. Gross THE WASHINGTON TIMES | Thursday, December 4, 2008

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UPDATED:

Wall Street showed moderate losses Thursday because of disappointing retail sales reports for November, weaker corporate earnings than expected and plans by AT&T to cut 12,000 jobs.

But the markets seemed to take the bad news in stride, with volatility absent, and even rose from their opening lows. The market has closed higher in seven of the previous eight sessions.

Wal-Mart Stores, Inc., showed a 3.4 percent boost in same-store sales. Other sales reports showed big declines.

At two hours before the close, the Dow Jones Industrial Average dropped 16.25, or 0.19 percent, to 8575.44, and the Nasdaq declined 9.93, or 0.67 percent, to 1482.45. The broader Standard & Poor's dipped 3.78, or 0.43 percent, to 866.96.

The lack of panic in the market that characterized recent trading activity may be an indication that investors have come to expect bad economic news in the midst of a recession.

"The mindset has changed a little," Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams in New York, told the Associated Press. "You just don't have that panic selling all day."

Among other retailers showing poor same-store sales results were Costco Wholesale Corp., whose drop was twice as big as analysts predicted. Bon-Ton Stores Inc., Limited Brands Inc. and Pacific Sunwear of California Inc. also showed declines.

The sales results came as little surprise because initial reports indicated weak performance for the crucial Thanksgiving weekend at a time when consumers are closing their wallets because of the declining economy that already has been designated a recession.

Investors consider consumer spending to be a significant indicator of economic health because it accounts for more than two-thirds of U.S. economic activity.

News from the corporate world didn't help the markets Thursday.

Giant AT&T said it will cut 12,000 jobs, or 4 percent of its work force, because of the economic slowdown. And chemical producer DuPont Co. said it will slice 2,500 jobs, most them geared to serving the U.S. and European auto and construction markets because of lower demand.

Auto sales and housing construction are down.

A piece of good news from the job market didn't help much.

The Labor Department said initial claims for unemployment insurance dropped to a seasonally adjusted 509,000 from an upwardly revised figure of 530,000 from the previous week. A survey by Thomson Reuters, an information company, said the number significantly was below analysts' estimates of 537,000.

Nevertheless, the number of people who claim benefits reached a 26-year high. The agency's weekly employment report is due for release Friday.

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