FILE- In this Feb. 5, 2019, file photo trader Michael Urkonis works on the floor of the New York Stock Exchange. The U.S. stock market opens at 9:30 a.m. EST on Thursday, Feb. 14. (AP Photo/Richard Drew, File)

Weak sales report sinks stock prices in midday trading

February 14, 2019 - 12:14 pm

NEW YORK (AP) — New figures showing that last month's holiday sales were far worse than previously expected helped drive stocks lower on Wall Street Thursday, threatening to end a four-day winning streak for the S&P 500 index.

The surprise drop in December sales, the worst in the decade, sank a range of stocks, including Amazon. Makers of consumer products also took a beating after Coca-Cola said its sales could slow this year because of the strong dollar.

Investors retreated into government bonds, sending benchmark yields lower.

Technology companies bucked the downward trend. Cisco, which makes networking equipment, rose after announcing a big stock buyback and reporting solid demand in its latest quarter.

Markets had been moving higher this week as investors became optimistic that new talks could move the U.S. and China closer to a resolution of their trade fight.

The negotiations began Monday, but key figures were set to meet Thursday and Friday in an attempt to avoid an escalation of tariffs that have raised prices for companies and consumers.

The nations are trying to hash out a deal before March 2, when the U.S. has said it would go ahead with penalties on an additional $200 billion of Chinese goods. President Donald Trump has reportedly said he's willing to let that deadline slide if talks go well.

The terrible holiday sales report in the U.S. and ongoing trade woes come at a time that worries about other global economies are deepening. China's economy grew at its slowest pace in three decades last year and Europe is contending with a slowdown in growth. Germany, the biggest economy in Europe, recorded no growth in the fourth quarter, just barely avoiding a recession.

KEEPING SCORE: The Dow Jones Industrial Average fell 83 points, or 0.3 percent, to 25,458 as of noon Eastern Time. The S&P 500 index fell 0.2 percent and The Nasdaq composite edged up 0.1 percent. Small-company stocks rose. The Russell 2000 index added 0.3 percent.

Slightly more stocks rose than fell on the New York Stock Exchange.

Bond prices rose sharply following the weak report on U.S. retail sales. The yield on the 10-year Treasury note fell to 2.66 percent. That yield is used to set rates on mortgages and other kinds of loans.

RETAIL RUT: Retailers moved broadly lower following release of the poor report on retail sales report. Retailers had foreshadowed the disappointing results earlier this month when they reported a weak holiday season.

J.C. Penney fell 3.3 percent and Amazon shed 1.3 percent. Kohl's fell 0.3 percent and Macy's was flat.

FLAT SODA: Coca-Cola plunged after the company gave investors a weak outlook as it grapples with rising costs. The beverage giant raised prices in 2018 to counter increasing import and transportation costs.

The company said currency fluctuations shaved 10 percent off its fourth quarter profit and it expects a stronger dollar hurt growth in 2019.

The stock fell 7.4 percent.

LESS TIME: Fossil plunged after reporting a global sales decline. Comparable sales, a key measure for retailers, fell in every region and for every product category. The watchmaker cited economic weakness in several regions, along with reduced discounting and price-matching as key reasons for the weak quarter.

The stock fell 12.5 percent.

DISASTER IMPACT: A surge in losses from wildfires and hurricanes helped push American International Group to a fourth-quarter loss. The insurer also reported lower investment income in the quarter.

The stock fell 7.4 percent.

LESS ACTION: Casino operators broadly fell on concerns that the growth of online gambling could be stunted by a recent U.S. Department of Justice opinion. MGM Resorts CEO Jim Murren, on a call with investors, decried the DOJ's opinion for a broader restriction on interstate gambling. The industry is looking to online gambling and sports betting as key drivers of growth.

MGM fell 5.9 percent, Wynn Resorts fell 3.3 percent and Las Vegas Sands fell 2.3 percent.

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