Dismal Report on Retail Spending Hits the Stock Market

NEW YORK (AP) -

A dismal report on retail spending in the U.S. and signs of slowing global growth drove stocks lower and sent yields on government bonds plunging as investors sought safety.

U.S. stocks fell from the start of trading on a report that consumers pulled back on spending last month and on a slump in European markets. At one point, the Dow Jones industrial average shed nearly 350 points.

Investors dumped some key commodities on fears global growth is stalling, pushing the price of copper to a five-year low, and they piled into German, British and U.S. government bonds. The yield on the 30-year U.S. Treasury fell to its lowest on record.

The Commerce Department reported that retail sales fell 0.9 percent in December, the biggest decline since January last year.

A report from the World Bank late Tuesday also weighed on markets. The bank lowered its forecast for global growth this year to 3 percent from 3.4 percent.

The price of copper, a metal used in construction and manufacturing, fell 14 cents, or 5.2 percent, to close at $2.51 a pound following the World Bank’s downgrade.

Investors buying up 10-year Treasury notes sent its yield, a benchmark for home loans and corporate borrowing, to 1.85 percent, its lowest since May 2013. The yield on the 30-year bond dropped below 2.4 percent for the first time.

The Standard & Poor’s 500 index fell 11.76 points, 0.6 percent, to 2,011.27.

The Nasdaq composite fell 22.18 points, or 0.5 percent, to 4,639.32 And the Dow Jones industrial average dropped 186.59 points, or 1.1 percent, to 17,427.09.

Stocks are swinging more this year as investors become anxious. The Dow index was down as much as 348.78 points in the early afternoon, before gaining back much of its losses. On Tuesday, the difference between the Dow’s high and low was more than 400 points.

Investors will turn their attention next to more corporate earnings reports as a handful of big companies are expected to report Thursday. Overall, companies in the S&P 500 are expected to report a modest 4.5 percent increase in fourth-quarter earnings per share compared with a year ago, according to S&P Capital IQ.

Among stocks making big moves:

  • The drop in commodities pushed mining giant Freeport-McMoRan down $2.30, or 11 percent, to $18.74.
  • JPMorgan Chase fell $2.03, or 3.5 percent, to $56.81 after reporting a 7 percent drop in fourth-quarter earnings.

The price of oil surged, despite a large increase in U.S. oil stockpiles, on a weaker dollar and traders’ expectations that oil had fallen too far recently. Benchmark U.S. crude rose $2.59 to close at $48.48 a barrel in New York. Brent crude, a benchmark for international oils used by many U.S. refineries, rose $2.10 to close at $48.69 in London.

In other futures trading on the NYMEX:

  •  Wholesale gasoline rose 8.2 cents to close at $1.351 a gallon.
  •  Heating oil rose 2.2 cents to close at $1.655 a gallon.
  •  Natural gas rose 29 cents to close at $3.233 per 1,000 cubic feet.
  •  Gold edged up 10 cents to $1,234.50 an ounce and silver fell 17 cents to $16.99 a pound.