Stock futures give up gains after worse-than-expected report on June retail sales

Stock futures dip after weak retail sales

NEW YORK — Stock futures gave up their gains Wednesday after a disappointing retail sales report chilled optimism from Intel’s strong earnings and outlook. Futures traded narrowly mixed.

Shoppers cut back on spending for the second straight month. The Commerce Department said June retail sales fell 0.5 percent. That’s worse than the 0.2 percent forecast from economists polled by Thomson Reuters. However, excluding autos, sales were down 0.1 percent, in line with expectations.

Retail sales are critical to the economic recovery because shoppers account for about 70 percent of the nation’s economic activity. High unemployment has kept customers out of stores and could hold retailers’ earnings in check.

Before the sales report, investors appeared ready to send the market higher for a seventh straight day after chipmaker Intel Corp. raised hopes that the recovery will pick up momentum.

Intel reported its biggest quarterly profit in a decade as large corporations started buying new computers for employees. Companies have been reluctant to upgrade technology during the downturn, so a return of spending could be a sign corporations are ready to start expanding their businesses again and hire new workers.

Intel’s profit and outlook, which surpassed analysts’ forecasts, are considered good signs for the economy because the chipmaker manufactures 80 percent of the processors that run PCs and has a large global reach.

“We have a lot of conflicting news here,” said Bob Enck, president and CEO of Equinox Fund Management in Denver. Until economic and earnings reports more closely align, the market is likely to remain choppy and volatile, Enck said.

Ahead of the opening bell, Dow Jones industrial average futures fell 5, or 0.1 percent, to 10,283. Standard & Poor’s 500 index futures fell 1.60, or 0.2 percent, to 1,088.10, while Nasdaq 100 index futures rose 2.75, or 0.2 percent, to 1,845.25.

Intel shares rose $1.08, or 5.1percent, to $22.09 in pre-opening trading.

The Dow rose 147 points Tuesday after aluminum producer Alcoa and railroad company CSX both reported better-than-expected profit. The pair also provided optimistic outlooks for the rest of the year.

The Dow is up nearly 7 percent during its current six-day winning streak, its best stretch since last July. The recent run-up has erased nearly all the Dow’s losses for the year.

Stocks were in a slump in May and June as economic reports showed the recovery wasn’t proceeding as fast as hoped. Rising debt problems in some European countries also added to the markets’ turbulence.

However, early earnings reports have shown that slow economic growth is not hurting corporate profits. Investors’ concerns about a further slowdown later in the year have not been shared by companies, which have largely provided upbeat outlooks for future quarters.

Meanwhile, bond prices rose Wednesday as investors were once again uneasy about stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.07 percent from 3.13 percent late Tuesday.

Overseas, Britain’s FTSE 100 fell 0.8 percent, Germany’s DAX index dropped 0.4 percent, and France’s CAC-40 fell 0.7 percent. Japan’s Nikkei stock average jumped 2.7 percent.