Stocks Fall on Retail Sales Reports

Stocks headed down today as retailers reported poor sales last month and even titan Wal-Mart failed to meet expectations.

The Dow Jones industrial average fell 1.2 percent or 102 points, while the Standard & Poor's 500 index was down 0.9 percent or 8 points. The Nasdaq fell 0.8 percent or 12 points.

Several retailers reported dismal sales data for December as slashing prices failed to lure many shoppers, making it one of the worst holiday shopping seasons in memory.

Wal-Mart was expected to benefit from shoppers who were bargain hunting, but it said sales were more challenging than expected. Sales rose 1.7 percent, excluding gasoline sales, last month, but analysts expected an 2.8 percent increase. Wal-Mart also lowered its fourth quarter profit outlook.

"The current economy remains challenging for all businesses, and retailers have already seen customers pull back on discretionary spending. Consumers are very focused on value and necessities," Tom Schoewe, Wal-Mart's executive vice president and chief financial officer, said in a statement.

The company's stock, one of the best performing in 2008, tumbled 8 percent this morning.

Macy's stock was down 2 percent after the department-store operator reported that same-store sales fell 4 percent last month. The company also announced it would close 11 stores in nine states.

In economic news, initial applications for unemployment insurance fell by 24,000 to a seasonally adjusted 467,000 last week, according to Labor Department data. That was better than expected by analysts.

The figures appear positive, but jobless claims remain high and last week's data were likely distorted by the holidays, analysts said. Jobless claims will likely rebound in the coming weeks, Ian Shepherdson, chief U.S. economist for High Frequency Economics, said in a research note today. "We would love to be able to argue with a straight face that this means the trend in claims is really leveling off or even falling, but we can't," he said.

The key, analysts said, will be unemployment data scheduled to be released tomorrow. Those government figures are expected to show that 500,000 to 700,000 people lost their jobs last month and that the unemployment rate rose to 7 percent.

After tumbling 12 percent yesterday, crude oil prices continued to slide today, trading down 3 percent to $41 a barrel.

Overseas stocks also fell. London's FTSE fell 1.4 percent, while the Dax in Germany was down 1.7 percent. Japan's Nikkei tumbled 4 percent.