Wal-Mart's Forecast, Weakening Dollar Send Stock Indexes Tumbling
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Tuesday, November 28, 2006
U.S. stock markets dropped sharply yesterday, spurred by higher oil prices, a weakening dollar and an unexpectedly glum sales forecast from Wal-Mart.
The Dow Jones industrial average closed down 158.46 points, to 12,121.71 -- a 1.3 percent loss. Twenty-seven of the 30 Dow stocks traded lower.
The Standard & Poor's 500-stock index dropped 19.05 points, to 1381.90, a drop of 1.4 percent. The Nasdaq composite index tumbled 54.34 points, to 2405.92, a 2.2 percent loss.
Investors weren't encouraged by the dollar's performance against the euro, which reached $1.3128 late yesterday in New York. Earlier, the euro traded at $1.3172, a 20-month high against the dollar. The dollar has been falling in recent days on concern about potential economic weakness in the United States and about the country's huge trade deficit and other global imbalances.
The stock pullback came on what retailers called Cyber Monday, a day they hoped would bring in colossal sales on their Internet sites.
Wal-Mart had already been trying to boost sales by cutting prices on items such as the Amazing Amanda Doll (to $69 from $99.97) and a Panasonic 61-inch TV (to $2,297 from $2,597). The retailer's Web site also offered 97-cent shipping on some products.
But Wal-Mart disappointed investors over the weekend when it announced that it expected sales at stores open at least a year to decline 0.1 percent this month. That would represent the retailer's first monthly drop in same-store sales since 1996.
Yesterday's stock sell-off also was driven by a 1.8 percent jump in crude-oil futures, fueled by reports that Saudi Arabia's oil minister may support a cutback in production at the next meeting of the Organization of Petroleum Exporting Countries.
Light sweet crude for January delivery gained $1.08 to settle at $60.32 a barrel.
Movers
Wal-Mart fell $1.29, to $46.61.
Lowe's rose 40 cents, to $1.33.
J. Crew fell $3.07, to $40.21.
Ford fell 36 cents, to $8.16.
