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Friday, July 13, 2007

Wall St stalls after weak retail sales

Wall St stalls after weak retail sales
By MIchael Mackenzie in New York
Copyright The Financial Times Limited 2007
Published: July 13 2007 14:00 | Last updated: July 13 2007 14:00



Wall Street’s drive into drive into record territory was set to cool on Friday after new data showed retail sales fell sharply last month.

The report cast doubt over whether the S&P 500 and bluechips would advance further after the opening bell after the benchmarks closed at record highs on Thursday.

Retail sales slumped 0.9 per cent in June, after a 1.5 per cent rise in May. Excluding cars and petrol, sales were down 0.3 per cent. It was the largest slide in headline sales since a decline of 1.5 per cent in August 2005, and was worse than a estimated fall of 0.1 per cent.

“After the spike in May, the June decline leaves the trend at a moderate pace,” said TJ Marta, strategist at RBC Capital Markets.

Equity index futures had edged above fair value just before the June retail sales report arrived and then subsequently slipped back.

Less than an hour before the opening bell, S&P 500 futures were unchanged at 1,555.70 and were trading below fair value of 1,556.97.

Nasdaq futures were up 1.5 points at 2,036.2, but were below a fair value reading of 2,039.47.

Futures for the Dow Jones Industrial Average were up 10 points at 13,9300, and had dropped from earlier highs after the data.

The yield on the 10-year bond edged lower after the retail sales number and was at 5.10 per cent, down from 5.12 per cent.

In earnings news, General Electric reported that second-quarter net income rose 9.6 per cent to $5.42bn, in line with analysts’ estimates. The conglomerate said it would exit its US mortgage business and increase its share repurchase programme this year to $14bn. In pre-market trade, GE was up 1.2 per cent at $39.45, just shy of its 52-week high of $39.77.

In deal news, Energizer agreed to buy Playtex, the maker of feminine care and infant products, for about $1.2bn. In pre-market trade, Playtex was up 17.7 at $18.27.

Earlier this week, profit warnings from retailers such as Home Depot and Sears sparked concern that US consumers are fading. That mood was sharply alleviated on Thursday, when same store sales in June from major retailers were better-than-expected at 2.4 per cent. Wal-Mart’s 2.4 per cent jump in same-store sales provided a major boost for sentiment.

Stocks surged on Thursday as the S&P 500 and blue chips entered record territory, boosted by a big deal in the mining sector and the Wal-Mart sales data. The S&P closed at a record high of 1,547.7, up 1.9 per cent for the day.

The Nasdaq Composite closed 1.9 per cent higher at 2,701.73. The Dow Jones Industrial Average closed up at a record high of 13,861.73, up 2.09 per cent for the day, representing its best one-day gain in two years.

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