US stocks return to losing ways

A day after the S&P 500 was bolstered by earnings from major retailers, reports from Staples, Target, and American Eagle Outfitters sent the S&P 500 back into negative territory and the Dow Jones Industrial Average below the 15,000 level.

Target shares fell 2.1 per cent to $66.52 after the company warned that consumer spending would be weak through the end of the year and that full-year profit would be on the low end of its guidance.

Target is among many US discount retailers including Walmart that have underperformed as the broader market and other consumer companies rallied in 2013.

Target shares are up 12.9 per cent on the year while the S&P 500 is up 15.5 per cent.

Office supply retailer Staples fell 13.3 per cent to $14.60 after the company scaled back its full-year earnings guidance for 2014 as weak international and US sales led to a decline in sales.

Rival Office Depot shares also fared poorly, off 5.4 per cent to $4.01. The company said on Thursday that it reached an agreement with activist investor Starboard Value over seats on the company's board.

Office Dept is in the midst of a merger with OfficeMax. OfficeMax shares were down 5.9 per cent to $10.30

American Eagle Outfitters, which sells youth-oriented clothing, dropped 8.3 per cent to $15.02 after reporting earnings per share well below expectations.

The company cited increased competition in the retail sector and a decline in foot traffic.

Retail weakness pushed the S&P 500 0.4 per cent lower to 1,646.78 with the utilities sector giving back Tuesday's gains as the 10-year US Treasury yield crept up. The Utilities SPDR ETF was 1.3 per cent lower at $37.07.

However US homebuilder stocks, which also tend to be sensitive to rising rates, received positive news that sales of existing US homes rose in July at their fastest pace since November 2009.

Luxury homebuilder Toll Brothers also reported a sharp rise in revenue and said it will raise prices. The company's shares were up 1 per cent to $31.94.

That helped DR Horton to add 0.6 per cent to $19.03 and Taylor Morrison Home to rise 2 per cent to $20.91.

The ongoing housing recovery boosted Lowe's, which reported earnings that beat estimates.

The home supply retailer rose 6.9 per cent to $47.13 and is now most than 31 per cent higher on the year to date.

The Dow Jones Industrial Average slipped 0.4 per cent to 14,941.20, sending it below the 15,000 level. The Nasdaq Composite Index was off 0.3 per cent to 3,602.77.

JPMorgan Chase shares fell again, down 1.2 per cent to $51.52. Late on Tuesday the FT reported that the bank had hired a law firm to investigate its hiring practices in Hong Kong.

BlackBerry shares moved 3 per cent lower to $10.22 after analysts said that an acquisition would leave its smartphone business with no value, as potential suitors would likely only want its patents, network, software and cash on hand.

The S&P 500 had already erased Tuesday's gains by noon with FOMC minutes set to come out in the afternoon. The benchmark index is now 0.7 per cent lower on the week.

Cam Albright, director of asset allocation at Wilmington Trust Investment Advisors, said investors have little to trade on at the moment aside from individual stock news.

The recent market lull should continue, he added, until investors have clarity on some of the larger issues facing US equities.

"The market continues to be a little apprehensive in large part by the fact that we have a lot of uncertainty over Fed policy, a lot of uncertainty over Fed leadership, and for the first time really throughout this financial crisis, some uncertainty over interest rates," he said. "We're probably not going to get a lot of answers to these questions until the FOMC meeting in September."

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