Ukraine conflict, disappointing earnings reports weigh on stocks
Stocks ended slightly lower on Thursday, marking their first loss in a week of record highs.
The escalating conflict in Ukraine, disappointing retail earnings and profit outlooks combined to weigh down the market, eclipsing some good news on the economy and the labor market.
“The key driver was largely the Ukraine news and the uncertainty of what that means,” said Erik Davidson, deputy chief investment officer at Wells Fargo Private Bank.
Stock index futures pointed to a lower opening in premarket trading, following a downward turn in global stock markets as traders reacted to the developments in Ukraine.
Ukraine President Petro Poroshenko said Russian forces had entered his country. He called an emergency meeting of the nation's security council.
The yield on the 10-year Treasury note declined as investors sought out lower-risk assets.
A string of disappointing earnings and profit outlooks late Wednesday and early Thursday also weighed on the market early on.
Not all the news was discouraging.
The Commerce Department estimated that the economy grew at an annual rate of 4.2 percent in the April-June quarter.
The Labor Department added to the good news, saying the number of Americans seeking unemployment benefits slipped last week to 298,000, a level that signals employers are cutting fewer jobs and hiring is likely to remain strong.
“The economic data in the U.S. continues to look quite good,” Davidson said.
Nonetheless, major stock indexes opened lower. They pared some of their losses as the day went on but remained down the rest of the day.
The Standard & Poor's 500 index fell 3.38 points, or 0.2 percent, to 1,996.74. The index hit highs the first three days of the week.
The Dow Jones industrial average slid 42.44 points, or 0.3 percent, to 17,079.57.
The Nasdaq composite shed 11.93 points, or 0.3 percent, to 4,557.69.
Major stock indexes are on track to end higher for the month and are up for the year.
Trading volume was lighter than the recent average leading into the Labor Day holiday.
Investors seized on the lackluster earnings to reduce their holdings in several retailers.
Williams-Sonoma tumbled 12 percent. The cookware and home furnishings company issued a disappointing full-year profit outlook late Wednesday. The stock shed $8.96 to $65.93.
Tilly's lost 4.3 percent as the company forecast a difficult summer, noting customer traffic was down and merchandise discounts were cutting into its profit. The stock slid 37 cents to $8.15.
Genesco also declined. The apparel and footwear seller issued a profit outlook that was shy of Wall Street's expectations. Its shares sank $6.73, or 7.6 percent, to $81.94.
Abercrombie & Fitch fell 4.8 percent as the teen clothing company reported revenue that fell short of analysts' estimates. The stock slid $2.13 to $41.87.
The poor earnings and outlooks from retailers ran counter to what has been a strong corporate earnings season, which has helped drive a late-summer revival for stocks.
The dour outlooks are particularly discouraging when one considers that the sector is entering what is traditionally the best season for retailers, said JJ Kinahan, chief strategist at TD Ameritrade.
“That does put a bit of a note of caution over everything,” he said.