Disappointing earnings from electronics retailer Best Buy sent stocks falling yesterday as investors feared lackluster consumer spending...
NEW YORK — Disappointing earnings from electronics retailer Best Buy sent stocks falling yesterday as investors feared lackluster consumer spending heading into the holiday season that would weaken the overall economy.
The Dow Jones industrial average fell 85.50 to 10,597.44.
Microsoft, one of the 30 Dow stocks, fell 13 cents to close at $26.48 a share. Boeing, also a Dow stock, gained 26 cents to $65.40.
Broader stock indicators also lost ground. The Standard & Poor’s 500 index dropped 9.36 to 1,231.20, and the Nasdaq composite index slid 11.08 to 2,171.75.
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Best Buy’s profit, which rose 25 percent from a year ago, missed Wall Street’s forecasts, and the company said the current quarter also would miss targets, heightening investors’ concerns that high gasoline and heating-oil prices will hurt consumers.
The retail news overshadowed a slightly better-than-expected report on wholesale inflation. The Labor Department’s Producer Price Index rose 0.6 percent last month, less than the 0.7 percent expected. With costly fuel prices removed, “core” PPI was flat for the month.
“You have some good economic data, but I think everyone is still trying to figure out what the post-Hurricane Katrina environment is like,” said Joseph Battipaglia, chief investment officer at Ryan Beck. “For now, the fundamentals look strong, but that could change in the next few months as the distortions caused by Katrina come through in the economic data, and that’s what has people holding off.”
A barrel of light crude was quoted at $63.11, down 23 cents, on the New York Mercantile Exchange.
Even as investors focused on oil and consumer spending, the latest economic data remained surprisingly robust. Along with the lower PPI report, the Commerce Department reported that the U.S. trade deficit fell to $57.9 billion in July from $59.5 billion in June despite higher import prices for crude oil.
Yet the results from Best Buy, the nation’s largest electronics retailer, cast a pall on the markets. Best Buy tumbled $5.57, or 11 percent, to $44.79.
“It’s hard to blame everything on just one company, but Best Buy’s earnings, and some disappointing commentary from the company, really got people questioning the impact of oil on consumer spending,” said Jeff Kleintop, chief investment strategist for PNC Financial Services Group in Philadelphia. “And with a lot of economic data and the Federal Reserve meeting next week, you’re going to find people hesitant to make any big moves.”
The Federal Reserve’s Open Market Committee meets Tuesday, and despite hopes that the Fed would pause in its steady stream of interest-rate increases, decent economic data after Katrina has led Wall Street to expect another quarter-percentage-point rate increase.