Soft retail sales hit investor confidence

US stocks slipped yesterday as soft retail sales and a sharp rise in the dollar left investors edgy a day before December’s US employment report.

Given a rise of about eight per cent in the S&P 500 since the start of December, investors could be looking for an excuse to sell stocks if the jobs report falls short of forecasts that were raised after Wednesday’s strong private-sector payroll report.

“If tomorrow's payroll numbers don't live up to expectations, that could create the correction that some have been predicting,” said Paul Radeke, vice president at Minneapolis-based KDV Wealth Management. Investors expect a gain of 175,000 in non-farm payrolls in December.

Several big retailers missed estimates in their December comparable sales, news that weighed on consumer shares. Target fell 6.8 per cent to $54.91 and Gap was 6.9 per cent lower at $20.70. The S&P retail index lost 1.6 percent while the S&P consumer discretionary sector fell 0.7 per cent.

The weakness “was both surprising and disturbing” said Walter Todd, chief investment officer at Greenwood Capital Associates in Greenwood, South Carolina. “It makes me think it had more to do with weather than fundamentals.”

The US dollar rose 0.7 per cent, helping send crude prices down 2.2 per cent. Oilfield services company Halliburton dropped three per cent to $38.22 while US Steel shed 2.5 per cent to $59.06.

The Dow Jones industrial average was down 25.58 points, or 0.22 per cent, at 11,697.31. The Standard & Poor’s 500 Index was down 2.71 points, or 0.21 per cent, at 1,273.85. The Nasdaq Composite Index was up 7.69 points, or 0.28 per cent, at 2,709.89.

The Nasdaq was buoyed by Nvidia, which surged 14 per cent to $19.33 on optimism over a new mobile chip. Another gainer was Microsoft, which rose 2.9 per cent to $28.82 after it took a step away from its alliance with Intel to team up with ARM Holdings. Intel fell 0.8 per cent to $20.77.

Telecommunications shares were among top drags on the Dow, with AT&T down 1.4 per cent at $29.15 and Verizon Communications off 2.6 per cent to $36.23.

About three stocks fell for every two that rose on the New York Stock Exchange while on the Nasdaq about five stocks fell for every four that rose.

About 8.39 billion shares traded on the NYSE, the American Stock Exchange and the Nasdaq.