Home » NEWS » Banking & Finance » Retailers lead a broad decline in stocks as Macy’s plunges
FILE - This Thursday, Oct. 2, 2014, file photo, shows the facade of the New York Stock Exchange.

Retailers lead a broad decline in stocks as Macy’s plunges

U.S. stock indexes are falling Wednesday as Macy’s leads a rout in retail stocks. The department store slashed its profit forecast after it reported a steep drop in earnings. Office supply companies Office Depot and Staples are tumbling after a judge blocked their plans to merge. Stocks are coming off their biggest gain in two months.

KEEPING SCORE: The Dow Jones industrial average sank 186 points, or 1 percent, to 17,742 as of 2:32 p.m. Eastern time. The Standard & Poor’s 500 index fell 16 points, or 0.8 percent, to 2,068. The Nasdaq composite index lost 33 points, or 0.7 percent, to 4,776.

THAT WASN’T EASY: Office Depot and Staples plunged after calling off their proposed merger. A federal judge ruled that competition for office supplies would be reduced if the largest office-supply chain combined with the second-largest, supporting the government’s effort to stop the $6.3 billion deal. Office Depot nosedived $2.35, or 38.5 percent, to $3.75 and reached its lowest price in three years. Staples skidded $1.84, or 17.8 percent, to $8.52.

Online rival Amazon, which is trading at all-time highs, rose $11.09, or 1.6 percent, to $714.16.

AN EXTRA LIFE: Video game maker Electronic Arts’ quarterly profit and sales were far stronger than expected, and it gave strong guidance for its current fiscal year. The stock jumped $8.03, or 12.4 percent, to $72.57.

DISASTER ON 34TH STREET: Department store Macy’s fell to its lowest price since December 2011 after it posted disappointing sales and said shoppers spent less on clothes and international tourists spent less. Macy’s also sharply reduced its annual profit forecast. The stock sank $5.09, or 13.8 percent, to $31.90. Retailers including Michael Kors, Nordstrom, Ralph Lauren and Kohl’s also took big losses.

THE QUOTE: “Consumers aren’t spending the way they used to spend, especially on apparel, and they’re not spending as much at the mall,” said Kate Warne, investment strategist for Edward Jones.

Warne said investors are worried about retail stocks because of weak sales and the rising price of oil and gas, which could crimp consumer spending. At the same time, competition within retail is getting more intense as stores deal with more Internet-based competition and sell bigger ranges of products to keep shoppers from going elsewhere.

OIL: Already trading at its highest price in six months, benchmark U.S. crude rose again after the government reported a surprise decline of 3.4 million barrels in supplies for last week. Analysts were expecting an increase. U.S. oil production also fell, and is down 6 percent compared to a year ago.

U.S. oil rose $1.36, or 3 percent, to $46.02 a barrel in New York. Brent crude, the benchmark for international oil prices, gained $1.73, or 3.8 percent, to $47.25.

Energy companies also traded higher. Chesapeake Energy rose 25 cents, or 5.8 percent, to $4.55 and Halliburton gained 95 cents, or 2.4 percent, to $39.79.

NOT A DISNEY ENDING: Disney posted weaker-than-expected earnings and sales. Its parks and consumer products divisions didn’t do as well as analysts hoped, and the company said it’s discontinuing its Disney Infinity video game line because the changing market is too risky. Its stock lost $4.72, or 4.4 percent, to $101.88.

WATCH OUT: Watch and accessories maker Fossil Group disclosed disappointing sales and said conditions have gotten worse. It cut its projections for the year, and its stock dropped $11.21, or 28 percent, to $28.89.

STAMPEDE: Pet food maker Blue Buffalo Pet Products advanced after it reported strong quarterly results and boosted its sales forecast for the year. The stock added $2.13, or 8.9 percent, to $26.01.

GETTING FRIED: Fast food chain Wendy’s raised its annual projections after reporting strong first-quarter results, but cautioned that a key sales measurement won’t meet its expectations in the second quarter. The stock gave up 83 cents, or 7.4 percent, to $10.35.

METALS: The price of gold rose $10.70 to $1,275.50 an ounce. Silver gained 23 cents, or 1.3 percent, to $17.32 an ounce. Copper picked up 1 cent to $2.10 a pound.

OVERSEAS: Germany’s DAX slid 0.7 percent and France’s CAC 40 was 0.5 percent lower. Britain’s FTSE 100 rose 0.1 percent. Japan’s Nikkei 225 edged up 0.1 percent, while South Korea’s Kospi fell 0.1 percent.

BONDS, CURRENCIES: Bond prices rose. The yield on the 10-year U.S. Treasury note fell to 1.73 percent from 1.76 percent. The dollar fell to 108.39 yen from 109.30 yen. The euro rose to $1.1432 from $1.1370.


… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.

If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.

Click for more info

About Associated Press

Leave a Reply