NEW YORK – Stocks ended mixed in a volatile session Monday as investors digested a sales warning from Wal-Mart Stores (WMT) and worried that the continued fall of the U.S. dollar would hurt the overall economy. Apple Computer (AAPL) boosted tech shares after brokerages raised their price targets.
The Dow Jones industrial average (search) fell 46.33 points, or 0.44 percent, to finish at 10,475.90, while the Standard & Poor's 500 Index (search) was down 4.08 points, or 0.34 percent, to close at 1,178.57. The Nasdaq Composite Index (search) was up 4.90 points, or 0.23 percent, to end at 2,106.87.
Dow component Wal-Mart fell nearly 4 percent after it slashed its forecast for November sales on Saturday, saying customer traffic slowed toward the end of the week.
Analysts said Wal-Mart's lower forecast could fuel concerns that high oil prices and lackluster job and wage growth could curb spending over the holidays, particularly among lower-income earners.
"Retail was clearly the story today," said John Caldwell, chief investment strategist at McDonald Financial Group.
"Everybody is talking about the Wal-Mart numbers and how disappointing they are, but the reality is that Wal-Mart has been gradually ratcheting back their sales numbers this year. There has been almost a direct correlation as oil and gas prices have been moving higher."
Wall Street was also focused on the dollar, prompted by Fed Chairman Alan Greenspan's (search) warning earlier this month that foreign investors could reduce their U.S. bond holdings should the dollar remain weak. Greenspan blamed a spiraling trade deficit and continued federal budget deficits for international investors' reactions.
Some analysts, however, thought Greenspan's warning, instead of helping matters, prompted increased speculation in both currency and bond markets, with the dollar falling to record lows against the euro last week. That, in turn, spooked stock investors, said Joe Battipaglia, chief investment officer at Ryan Beck & Co.
"His statement didn't help whatsoever," Battipaglia said.
Even stabilizing crude oil futures failed to assuage investors' concerns. A barrel of light crude settled at $49.76, up 32 cents, on the New York Mercantile Exchange (search).
Other retailers fared better in holiday sales, but many remained under pressure due to Wal-Mart's report. Target Corp. (TGT) slipped 31 cents to $51.90, J.C. Penney & Co. (JCP) dropped 65 cents to $39.91, Sears Roebuck & Co. (S) lost $1.88 to $52.42, and Kmart Holding Corp. fell $5.38 to $102.01.
Apple Computer Inc. (AAPL) climbed $3.89 to $68.44 after Merrill Lynch raised its price target to $78 from $61 on expectations of increased sales of iPod, Apple's digital music player. Brokerage firm UBS also increased its price target for Apple to $77 from $66.
IBM Corp. (IBM) and Sony Corp (SNE) have collaborated on a new semiconductor specifically designed for home entertainment products, according to The Wall Street Journal. The two companies are reportedly ready to announce a limited production run for the chip, the newspaper said. IBM rose 78 cents to $95.50, while Sony gained 40 cents to $36.37.
Amazon.com Inc. (AMZN) was down about 2 percent at $38.25 following a weekend article in Barron's, a weekly financial newspaper, which argued the company is more of a retailer than a technology company.
The selloff on Wall Street also was prompted by a drop in the government bond market, where there were fears of foreign bondholders abandoning Treasury bills as the dollar continues to weaken.
Ten-year treasury notes fell 71.875 cents to $99.34375, with the yield rising from 4.23 percent to 4.33 percent. At its next meeting, the Fed is widely expected to raise the benchmark interest rate by a quarter percentage point to 2.25 percent.
Shares of U.S. home builders fell with the sell-off in the Treasuries market. The Dow Jones U.S. Home Construction Index was off 3 percent. Shares of industry leader D.R. Horton Inc. (DHI) slid nearly 3 percent, or 90 cents, to $35.21, while Pulte Homes Inc. shares (PHM) dropped 3.7 percent, or $2.13, to $55.46.
Shares of Kellogg Co. (K) fell 3.4 percent after the cereal maker named James Jenness as chairman and chief executive, replacing Carlos Gutierrez (search), who is stepping down after being nominated as the U.S. commerce secretary. The stock was down $1.54 at $43.47.
Many investors held out hope for better economic news this week, with a reading of the nation's gross domestic product coming Tuesday and the Labor Department's jobs creation report on Friday.
"This is a huge week from an economic release standpoint, and we'll have a lot of datapoints to get through before we'll be able to see if this rally we've had can continue," said Hans Olsen, managing director and chief investment officer at Bingham Legg Advisers. "If we see enough positives, we could have reason for cheer on Friday."
Trading was active with 1.4 billion shares changing hands on the New York Stock Exchange, equal to the 1.4 billion daily average for last year. About 1.8 billion shares were traded on Nasdaq, above the 1.69 billion daily average last year.
The Russell 2000 index of smaller companies was up 3.30, or 0.52 percent, at 634.46.
Overseas, Japan's Nikkei stock average rose 1.33 percent. In Europe, Britain's FTSE 100 closed up 0.18 percent, France's CAC-40 slipped 0.04 percent for the session, and Germany's DAX index fell 0.18 percent.
Reuters and the Associated Press contributed to this report.