While you were sleeping: US retail sales drop, Wall St slides

Thursday 14th May 2009

US retail sales unexpectedly fell last month, dampening optimism for an early economic recovery as the number of jobless Americans soars. Stocks on Wall Street fell and the dollar gained.

Retail sales fell 0.4% in April, after a revised 1.3% decline in March, according to the Commerce Department.

The US dollar rose from a seven-week low against the euro and the yen gained against most major currencies as the weak retail sales spurred demand for the world’s biggest currencies as a haven. The euro also fell as European Central Bank council member Marko Kranjec said the ECB may increase asset purchases to more than bonds.

The US dollar rose to $1.3597 per euro from $1.3648 while weakening to 95.33 yen from 96.45. The yen gained to 129.6 per euro from 131.63.

Copper fell for the fourth day in a row as weaker equity markets and concern about a slower recovery drove down the price of the metal used to make pipes and wires.

Copper futures for July delivery edged down or 0.1% to US$2.086 a pound on the New York Mercantile Exchange.

Crude oil also gave up its gain as Wall Street’s slide outweighed US government data showing a decline in stockpiles of oil and gasoline. The US Energy Information Administration said crude inventories in America fell by 4.7 million barrels. Brent crude fell US$1.90 to US$56.91 a barrel. Crude fell 60 cents to US$58.25 a barrel.

The Organisation of Petroleum Exporting Countries forecast world demand for oil would be weaker than previously estimated this year.

Gold rose as stocks fell and investors sought the precious metal as a haven. Gold for June delivery climbed US$3.60 to US$927.50 an ounce in New York.

The Standard & Poor’s 500 Index dropped 2.7% to 883.92, its third daily decline, and the Dow Jones Industrial Average slipped 2.2% to 8284.89. The Nasdaq Composite dropped 3% to 1664.19.

Wal-Mart Stores declined 1.2% to US$50.03 after retail sales fell. Macy’s Inc., the second-biggest U.S. department store, fell 6.7% to US$11.52 after reporting a wider first-quarter loss after cutting prices in response to a sales downturn. Walt Disney slipped 3% to US$23.60.

Bank of America tumbled 10% to US$11.01, leading the Dow lower, and Citigroup fell 6.8% to US$3.41. Aluminium producer Alco dropped 8.8% to US$8.63.

Chip-maker Intel fell 0.5% to US$15.13 after EU regulators fined the company a record 1.06 billion euros for antitrust violations. The European Commission said Intel paid computer makers to hold off products using chips from rival AMD.

General Motors jumped 5.2% to US$1.21. GM and Chrysler may drop as many as 3,000 US dealers as they slash costs, Reuters reported, citing a person familiar with the plans.

Centex Corp. fell 7.3% to US$9.38 after figures showed foreclosures rose to a record in April, with on in 374 households getting a default notice or having property seized, according to RealtyTrac Inc.

Industrial production in the Euro zone fell a greater-than-expected 2% in March to be 20.2% lower year-on-year, stoking concern the contraction in the region’s economy may have been greater than expected in the first quarter. The annual decline was a record, according to the European Union's statistics office.

Stocks in Europe fell after the Bank of England said the UK economy was recovering only slowly and as the US retail sales slide weighed on sentiment.

“The risks are weighted toward a relatively slow and protracted recovery,” BOE Governor Mervyn King said in London.

ING Groep tumbled 10% after posting a quarterly loss. Land Securities Group fell 13% after the UK’s biggest real estate investment trust posted a record full-year loss.

Rio Tinto shed 11% as metal prices fell and after a report in the UK’s Telegraph newspaper said the mining company planned to raise capital.

The Dow Jones Stoxx 600 declined 2.7% to 200.72.

The UK’s FTSE 100 fell 2.1% to 4331.37, Germany’s DAX Index slipped 2.6% to 4727.61 and France’s CAC 40 shed 2.4% to 3152.90.

Businesswire.co.nz

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