Stocks pulled back moderately Wednesday as investors returned from the Christmas holiday to news of weaker-than-expected retail sales. A jump in oil prices also raised concerns among investors.
The International Council of Shopping Centers said its index of retail chain store sales rose 2.8 percent last week, rounding out a sluggish December performance that puts retailers on track for a smaller sales gain than the trade group originally expected. Still, there is some hope sales will rebound as shoppers start spending with holiday gift cards.
Other reports released alongside Christmas proved disappointing. Target Corp. indicated its sales may have fallen in December, while MasterCard Inc. said holiday spending _ including credit, cash and checks _ climbed a modest 3.6 percent between Thanksgiving and Christmas, weighed by a slowdown in sales of women's apparel. That compares with a rise of 6.6 percent over the same period last year.
The news could raise concerns about the strength of consumer spending and, in turn, the economy. However, it has been widely expected that holiday sales would be slower than in years past.
A report that U.S. home prices fell for the 10th consecutive month in October also appeared to weigh on investors.
Kim Caughey, senior equity analyst at Fort Pitt Capital Group in Pittsburgh, said reports on retail had upended some investors' hopes for strong consumer spending in the long weekend before Christmas.
"From the quick analysis it doesn't look like it was a great year. I think investors had held out hope that retail might have had that final flourish. It was a sad flourish, not a strong one," she said.
In midday trading, the Dow Jones industrial average fell 39.75, or 0.29 percent, to 13,509.58.
Broader stock indicators also fell. The Standard & Poor's 500 index declined 5.57, or 0.37 percent, to 1,490.88, and the Nasdaq composite index fell 8.80, or 0.32 percent, to 2,704.70.
Major stock indicators advanced in the previous three sessions. In Monday's abbreviated trading, stocks rose amid news that Merrill Lynch & Co. would get a cash infusion from two investment groups, including Singapore's government-controlled fund Temasek Holdings. The money is expected to cushion the brokerage's mortgage-related writedowns in the fourth quarter.
The stock, bond and commodities markets were closed Tuesday for Christmas.
Bond prices showed little movement. The yield on the 10-year Treasury note, which moves opposite its price, traded flat at 4.21 percent with late Monday.
The dollar was mixed against other major currencies, while gold prices rose.
Caughey said rising oil prices were likely adding pressure to stocks but noted that the light trading volume seen in both Monday's and Wednesday's sessions meant investors shouldn't focus too much on the market's moves.
"I don't know if the direction means anything but the magnitude does," she said. "A little bit of sentiment goes a long way on light trading days."
But for those investors examining the markets, the holidays loomed large as Wall Street looked for signals about the consumer but also insights about the broader economy.
The Standard & Poor's/Case-Shiller home price index posted a decline of 6.7 percent, marking the steepest monthly decline since early 1991. The index follows prices of existing single-family homes in 10 metropolitan areas and compares them with a year earlier.
The Richmond Federal Reserve reported that regional economic activity fell in December after remaining flat in the prior month.
Among chain stores, Target fell $1.37, or 2.6 percent, to $51.10 after the nation's No. 2 retailer said same-store sales _ those from stores open at least a year _ would range from a 1 percent increase to a 1 percent decrease for the five weeks through Jan. 5. Earlier expectations had called for a gain of 3 percent to 5 percent.
Wholesale Corp.'s chief financial officer told The Wall Street Journal it had "pretty good" holiday-season results so far. CFO Richard Galanti said the mass merchandiser largely avoided inventory gluts that would necessitate hefty markdowns. Costco slipped 66 cents to $70.10.
Macy's Inc., parent of its namesake chain as well as Bloomingdale's, declined $1.46, or 5.4 percent, to $25.55 after falling to a three-year low of $25.25 earlier in the session.
Acquisition perhaps helped ease some of investors' concerns. Warren Buffett's Berkshire Hathaway Inc. on Tuesday agreed to pay $4.5 billion (euro3.1 billion) to buy 60 percent of Marmon Holdings Inc., a privately held company with more than 125 manufacturing and service businesses.