Stocks fall on mixed earnings, economic reports; Rising dollar weighs on market

Stocks turn lower on earnings data, rising dollar

NEW YORK — Stocks mostly fell Tuesday as disappointing reports about retailers and manufacturing gave investors little incentive to keep buying after two weeks of big gains.

A rebounding dollar also sapped investors’ appetite for stocks.

Retailers’ earnings reports offered little insight into one of the market’s biggest worry points: how much consumers are spending. Home Depot Inc., Saks Inc. and Target Corp. all reported better-than-expected third-quarter results but also said they remain cautious ahead of the holiday shopping season.

“Despite the dramatic rally in the stock market, we still see the consumer operating at recessionary levels,” said Uri Landesman, chief equity strategist and senior portfolio manager at ING Investment Management in New York.

Better retail news pushed stocks higher Monday as a government report showed a rebound in overall sales in October. Investors are looking for signs that consumer spending, one of the biggest drivers of the U.S. economy, will recover during the holiday season.

A report on industrial production disappointed the market. The Fed said output at the nation’s factories, mines and utilities rose 0.1 percent in October, less than the 0.4 percent predicted by economists polled by Thomson Reuters.

Meanwhile, signs of inflation remained muted, a positive signal for the economy. The Labor Department’s Produce Price Index, which measures inflation at the wholesale level, rose less than expected in October. The 0.3 percent rise was smaller than economists’ forecasts of 0.5 percent and followed a decline of 0.6 percent a month earlier.

“The market is saying inflation is not an issue,” said Tim Courtney, chief investment officer at Oklahoma City-based Burns Advisory Group. He said that’s a signal interest rates will remain low.

The dollar, whose slump since the spring has helped prop up commodity and stock prices, rose against other major currencies, a negative for stock market sentiment. A higher dollar makes U.S. exports less competitive overseas and also tends to depress commodity prices. The price of gold fell after setting a record a day earlier.

In early afternoon trading, Dow Jones industrial average fell 18.51, or 0.2 percent, to 10,388.45. The broader Standard & Poor’s 500 index fell 4.30, or 0.4 percent, to 1,105.00, while the Nasdaq composite index fell 5.82, or 0.3 percent, to 2,192.03.

Three stocks fell for every two that rose on the New York Stock Exchange, where volume came to 460.4 million shares compared with 546.7 million shares traded at the same point Monday.

At the start of trading Tuesday, the Dow was up 694 points, or 7.2 percent, for the month. That has some analysts saying the market has been rising too fast given problems like unemployment still facing the economy.

Major indexes jumped to 13-month highs on Monday on the bigger-than-expected rebound in retail sales in October. The Dow jumped 136 points and the S&P closed above the 1,100 level for the first time in more than a year. Stocks will often pause in the days immediately after big gains.

A weaker dollar on Monday also sent commodities prices higher, which in turn lifted the stocks of energy and basic materials companies. Stocks have frequently been moving in the opposite direction of the dollar in recent months.

Crude oil fell 22 cents to $78.68 per barrel on the New York Mercantile Exchange.

Bond prices mostly fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.35 percent from 3.34 percent late Monday.

Among retailers, Home Depot fell $1, or 3.6 percent, to $26.65, while Saks rose 28 cents, or 4.4 percent, to $6.69. Target fell $2.14, or 4.3 percent, to $48.15.

Meanwhile, Jacobs Engineering Inc. fell $6.30, or 13.9 percent, to $39.19 after the company’s fourth-quarter earnings slid 31 percent and the company’s forecast fell short of expectations.

The Russell 2000 index of smaller companies fell 2.22, or 0.4 percent, to 600.65.

Overseas, Japan’s Nikkei stock average fell 0.6 percent. Britain’s FTSE 100 fell 0.7 percent, Germany’s DAX index fell 0.5 percent, and France’s CAC-40 lost 0.9 percent.