Wall Street struggled to gain ground yesterday as high oil prices punctured optimism stemming from positive retail sales data.
By the close, the Dow Jones Industrial Average managed a 0.2 per cent gain to 10,833.03, while the S&P 500 index was flat at 1,210.46. The Nasdaq Composite edged down 0.4 per cent to 2,058.40.
The obstinately high crude oil price countered news of strong growth in sales last month from several retailers, as well as a handful of economic data that all supported the bullish casevery much . Inflationary fears were put at ease by productivity growth, service-sector activity was reported to have risen and job creation trends were looking up in yesterday’s data reports.
A 3.8 per cent advance to $57.40 for Boeing stock provided the bulk of the gains for the Dow industrials, while Apple Computer shares, down 5.3 per cent at $41.79, bit into the Nasdaq Composite.
Peter Cardillo, chief US equity strategist at SW Bach, said: “The fundamentals are very good but the market is trapped in a trading range and oil is capping the gains.”
Among retailers, Talbots, a clothing chain, was up 8 per cent at $31.73. Aeropostale, another clothing retailer, reported a 13.4 per cent rise in same-store sales and saw its shares rise 1.9 per cent to $33.70. Starbucks, the coffee house chain, rose 1.5 per cent to $53.59 after same-store sales rose 9 per cent.
However, a few companies in the sector sounded a less sanguine note, with Pier 1 Imports lowering earnings forecasts as it said February same-store sales declined 15.3 per cent. Its shares edged off 0.2 per cent to $18.49.
Wal-Mart, the world’s largest retailer, reported a 4.1 per cent rise in same-store sales at stores open at least a year. Its shares gained 1.8 per cent to $52.86.
Target, its leading rival, fared even better, reporting a 9 per cent increase in same-store sales that sent its shares moving 1.2 per cent higher to $52.50.
Shares in Petsmart, a retailer of animal food and other accessories, were 2.8 per cent lower at $29.65 after the company reported higher quarterly earnings but said it would have to restate some past results.
Away from the retail sector, shares in Fannie Mae eased 1.9 per cent to $58.51 after the government-sponsored housing mortgage finance group said it would need to restate some results due to a change in accounting procedures.
In energy, ChevronTexaco shares edged off 0.6 per cent to $61.19 and Unocal rose 12.3 per cent to $60.10 after reports that Chevron was looking to buy Unocal.
On the economic front, fourth-quarter labour productivity rose above economists’ estimates as labour costs declined. The figures helped assuage recent fears about inflationary pressures and the subsequent need for the US Federal Reserve to accelerate its tightening of monetary policy.
And the number of Americans applying for unemployment benefits also declined last week. The data fanned hopes that that today’s monthly jobs report would show a sharp rise in the number of jobs created outside the farm sector in the world’s largest economy last month.
Ian Shepherdson, the chief US economist at High Frequency Economics, said: “The case for expecting big payroll gains either in tomorrow’s [today’s] February report or shortly thereafter becomes stronger by the day.”