Thursday, Wall Street drops sharply in early trading after retailers posted sluggish back-to-school sales reports and the government informed the number of workers seeking unemployment benefits spiked last week.
Investors, still wary about the overall state of the economy, are feeling uneasy after many of the nation's retailers said shoppers curtailed spending last month due to higher gas and food prices. However, Wal-Mart Stores Inc., which is the world's largest retailer, beat Wall Street projections because of its discounts.
On the other hand, the Labor Department said new applications for unemployment insurance rose by 15,000 from the previous week. That widely missed expectations for a fourth-straight week of declines.
Crude prices rose as Wall Street waited to see if a weekly U.S. inventory report would contain evidence that slowing economic growth has cut demand. The Energy Department is scheduled to release its report on oil stockpiles for the week ended Aug. 29 later in the session. In addition, a barrel of light sweet crude rose 21 cents to $109.56 a barrel on the New York Mercantile Exchange. It dipped below $108 a barrel on Wednesday.
Investors are also awaiting a report that is expected to show the nation's service sector improved slightly last month.
In early trading, the Dow Jones industrial average fell 127.91, or 1.11 percent, to 11,404.97. Moreover, broader indexes were also lower. The Standard & Poor's 500 index fell 8.28, or 0.65 percent, to 1,266.70; the NASDAQ composite index dropped 18.92, or 0.81 percent, to 2,314.81.
Thursday, bond prices moved higher. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.68 percent from 3.70 percent late Wednesday.
In corporate news, Wal-Mart said sales of groceries and back-to-school products helped its August same-store sales rise 3 percent, beating expectations. Shares rose 55 cents to $60.33. On the other hand, Toll Brothers Inc. shares fell 72 cents, or 3.4 percent, to $23.97 after the homebuilder reporter it swung to a third-quarter loss as sales fell amid the housing slump. Moreover, the Russell 2000 index of smaller companies fell 4.85, or 0.65 percent, to 737.06.
Overseas, the European Central Bank and the Bank of England left their benchmark interest rates unchanged, a move analysts expected as both face rising inflation and slowing economic growth. Germany's DAX index fell 1.64 percent, Britain's FTSE 100 rose 0.53 percent, and France's CAC-40 shed 1.25 percent. Meanwhile, Japan's Nikkei stock closed down 1.04 percent.
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