Disappointing Retail News Leads To Lower Close On Wall Street - U.S. Commentary

(RTTNews) - Stocks moved mostly lower over the course of the trading day on Wednesday following the release of disappointing U.S. retail sales data. With the losses on the day, the Dow and the S&P 500 pulled back further off the nearly two-month closing highs set on Monday.

The major averages moved roughly sideways going into the close, stuck in negative territory. The Dow slid 157.14 points or 0.9 percent to 16,924.75, the Nasdaq dipped 13.76 points or 0.3 percent to 4,782.85 and the S&P 500 fell 9.45 points or 0.5 percent to 1,994.24.

The weakness on Wall Street was partly due to the release of a Commerce Department report showing that retail sales rose less than expected in September.

The report said retail sales edged up by 0.1 percent in September, while economists had expected sales to rise by 0.2 percent.

Excluding auto sales, retail sales actually fell by 0.3 percent during the month compared to economist estimates for a 0.1 percent drop.

While the report reinforced expectations that the Federal Reserve will hold off on raising interest rates, the data also renewed concerns about the economic outlook.

News out of Wal-Mart (WMT) also weighed on the markets, as the retail giant lowered its revenue outlook for fiscal 2016, citing the impact of a stronger U.S. dollar.

Wal-Mart said it now expects net sales growth for fiscal 2016 to be relatively flat due to the stronger than anticipated impact from currency exchange rate fluctuations.

Shares of Wal-Mart have moved sharply lower on the news, plunging by 10 percent to their lowest closing level in over three years.

Financial giant JP Morgan Chase (JPM) also posted a notable loss after reporting below-consensus earnings and revenues for the third quarter.

Meanwhile, shares of Intel (INTC) moved to the upside on the day after the semiconductor giant reported better than expected third quarter results.

Sector News

Retail stocks saw significant weakness on the heels of disappointing sales data and the news from Wal-Mart. The Dow Jones Retail Index tumbled by 1.9 percent, pulling back further off the nearly two-month closing high set on Monday.

Along with Wal-Mart, Pacific Sunwear (PSUN), Best Buy (BBY), and Dick's Sporting Goods (DKS) also posted notable losses.

Considerable weakness was also visible among housing stocks, as reflected by the 1.8 percent loss posted by the Philadelphia Housing Sector Index. KB Home (KBH) and Hovnanian (HOV) turned in two of the sector's worst performances.

Financial stocks also came under pressure on the day, with JP Morgan helping to lead the sector lower. The Dow Jones Banks Index and the NYSE Arca Broker/Dealer Index fell by 1.5 percent and 1.3 percent, respectively.

On the other hand, gold stocks moved sharply higher on the day, driving the NYSE Arca Gold Bugs Index up by 7.8 percent. The strength in the sector came as gold for December delivery climbed $14.40 to $1,179.80 an ounce.

Significant strength also emerged among semiconductor stocks, resulting in a 3.8 percent jump by the Philadelphia Semiconductor Index. SanDisk (SNDK) posted a standout gain following a Bloomberg report the company has hired a bank to explore a potential sale.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region saw further downside during trading on Wednesday. Japan's Nikkei 225 Index tumbled by 1.9 percent, while Hong Kong's Hang Seng Index fell by 0.7 percent.

The major European markets also came under pressure on the day. While the French CAC 40 Index dropped by 0.7 percent, the German DAX Index and the U.K.'s FTSE 100 Index both slumped by 1.2 percent.

In the bond market, treasuries climbed firmly into positive territory on the disappointing retail sales data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 7.4 basis points to a five-month closing low of 1.981 percent.

Looking Ahead

Economic data may remain in focus on Thursday, with traders likely to keep a close eye on reports on consumer prices, jobless claims, and regional manufacturing.

On the earnings front, Citigroup (C), Goldman Sachs (GS), and UnitedHealth (UNH) are among the companies due to report their quarterly results before the start of trading on Thursday.