Dow gains on retail sales but Nasdaq suffers

THE Dow rose yesterday as robust US retail sales data helped large-cap consumer stocks, but a four per cent slide in Apple hurt the Nasdaq.

US retail sales for March shot up 0.8 per cent, sharply higher than the forecast, pushing Procter & Gamble up 1.5 per cent, while giving Wal-Mart Stores, the world’s largest retailer, a 1.4 per cent boost.

But Apple shares dropped 4.2 per cent to $580.13. After a meteoric rise of 43 per cent this year, the technology giant was ripe for profit taking.

Apple wasn’t the market’s only worry. Spain’s rising borrowing costs and a weak New York state manufacturing report stirred concerns about Europe’s debt crisis and the US economic recovery.

“The market behaviour is fairly manic today and investors are confused after a mixed set of data, Spanish yields, and momentum stocks like Apple losing ground,” said James Dailey, portfolio manager at TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.

“The confusion is leading to anxiety, and that's why we are seeing the blue chips, the large caps, outperform.”

Other major drags on the Nasdaq included a slide of nine per cent in the shares of Mattel, the world’s largest toy maker, on declining quarterly sales, and a three per cent drop in Google shares ahead of a high-stakes legal battle with Oracle.

The Dow Jones industrial average rose 0.56 per cent, to 12,921.41 at the close. But the Standard & Poor’s 500 Index inched down 0.05 per cent, to 1,369.57. The Nasdaq Composite Index dropped 0.76 per cent, to close at 2,988.40.

Procter & Gamble, the world’s largest household products company, closed at $66.78, up 1.5 per cent, and helped bolster the Dow. Wal-Mart, another Dow component, ended at $60.58, up 1.4 per cent.

“Barring an accelerated flight of assets out of the Eurozone and into US equities, we see little reason for equities to rally appreciably above the most recent high,” said Peter Cecchini, managing director at Cantor Fitzgerald in New York.

“Having said this, we are expecting a short-term bounce, which may lead to a retest of 1,400,” he said.

Yesterday’s mixed session followed last week’s pullback, when both the Dow and the S&P 500 suffered their worst two-week percentage drops since late November on increasing concerns about the Eurozone’s debt crisis and weaker-than-expected US economic data.

Earnings season will pick up steam this week, with 86 S&P 500 companies scheduled to report results.

According to Thomson Reuters data, of the 34 S&P 500 companies to have reported earnings so far, 76 per cent have reported earnings above analysts’ expectations.