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Report of a third straight month of weak consumer spending sends stocks lower on Wall Street
NEW YORK (AP) Stocks are heading for their seventh drop in eight days after a report that U.S. consumers cut their spending.
The Dow Jones industrial average fell 25 points, or 0.2 percent, to 12,752 in late afternoon trading Monday.
The Commerce Department said retail sales fell 0.5 percent in June from the month before as Americans spent less on autos, furniture and appliances. It was the third straight month of declining sales. The last time that happened was during the fall of 2008, at the depth of the global financial crisis.
"The summer soft patch is here, and it could be here a while," said Randy Frederick, a managing director at Charles Schwab, the stock brokerage firm. "Consumers are belt-tightening."
Companies that rely heavily on consumer spending were among the weakest on the New York Stock Exchange. Home Depot fell 61 cents to $51.48 and Lowe's Cos. lost 82 cents to $25.90.
Industrial stocks also fell sharply. General Electric lost 26 cents to $19.51 and heavy equipment maker Caterpillar lost $1.27 to $80.80, one of the biggest losses among the 30 stocks that make up the Dow average.
Also dampening spirits was news that the International Monetary Fund trimmed its estimate for global economic growth. The global lender said it expects the world economy to expand 3.5 percent this year, down from its previous estimate of 3.6 percent in April. It cut its growth estimates for next year, too.
In other trading, the Standard & Poor's 500 index fell one point to 1,356 and the Nasdaq composite index fell six points to 2,902.
Comments from Chinese Premier Wen Jiabao over the weekend were also weighing on the market. Wen said his country's economy has not yet entered a recovery and "economic difficulties may continue for some time." Some of the weakness in China comes from the debt crisis in Europe, which has crippled spending on imported goods.
In the Treasury market, the yield on the benchmark 10-year Treasury fell to 1.45 percent from 1.49 percent late Friday as investors sought the relative safety of government debt.
In Europe, borrowing rates for Italy and Spain rose again, the latest signal that bond investors are leery of the finances of those countries. Stocks fell 2 percent in Spain and 0.4 percent in Italy. Benchmark indexes in Germany and France were flat.
The U.S. corporate earnings season resumes in earnest this week with reports from major companies that cover a wide span of the economy. On deck Tuesday are Harley-Davidson, Coca-Cola, Goldman Sachs and Johnson & Johnson. Intel and Yahoo also report this week.
Other stocks making big moves included:
Visa rose $3.07 to $127.16 and MasterCard rose $8.04 to $437.64. The two giant payment processing companies, along with major banks, settled a seven-year old lawsuit with merchants over fees they charge when customers pay with credit cards.
Par Pharmaceutical jumped $13.42 to $50. The generic drug maker agreed to be acquired for $1.84 billion in cash by the private investment firm TPG. The offer was a 37 percent premium to Friday's closing price.