Retailers lead stocks up; Sagging sales hit tech
By MATTHEW CRAFT AP Business Writer April 11, 2013 11:40AM
Traders gather at a post on the floor of the New York Stock Exchange Thursday, April 11, 2013. Stock indexes are little changed in early trading on Wall Street after three days of gains. (AP Photo/Richard Drew)
Updated: April 11, 2013 12:12PM
NEW YORK -- Rite Aid, Ross Stores and other retail stocks rose Thursday after turning in better sales, and major indexes edged up for a fourth day.
Technology stocks slumped following a drop in computer sales.
Stocks in retail stores were among those making the biggest gains. The discount chain Ross Stores jumped 7 percent, the biggest gain in the S&P 500. The company said that stronger sales in March will likely push profits above its previous estimate.
Makers of computer hardware and software fell sharply following a report late Wednesday that shipments of PCs dropped 14 percent worldwide in the first three months of this year compared with last year. That’s the deepest quarterly drop since International Data Corp. started tracking the industry in 1994.
“The IDC report is much worse than anyone expected,” said David Brown, director of Sabrient Systems, an investment research firm. “That’s obviously shaking up the tech sector, but everything else is resuming the climb.”
The three companies in the Dow that do business in PCs fell the most of the 30 stocks in the index. Hewlett-Packard dropped 6 percent, Microsoft fell 5 percent and Intel 2 percent. Without those declines, the Dow would be 28 points higher.
The Dow Jones industrial average was up 55 points to 14,858 shortly after noon, a gain of 0.4 percent. It jumped 128 points the day before. The Standard & Poor’s 500 index was up six points, or 0.4 percent, at 1,593.
The tech-heavy Nasdaq composite index fell less than one point to 3,297.
Of the 10 industry groups in the S&P 500, information technology was the only one to fall. Consumer discretionary stocks, a group that includes department stores and other retailers, rose the most, 1 percent.
It was a different story on Wednesday, when technology stocks surged on optimism that businesses would step up spending. That pushed the Dow and the S&P 500 index to their third straight day of gains as well as record highs.
The stock market is on a stunning run this year, clearing record highs and recovering losses from the financial crisis and Great Recession. For the year, the Dow is up 13 percent, the S&P 500 index 12 percent.
Brown thinks the market can continue climbing. Measured against earnings, the stock market doesn’t look expensive, he said. And compared to the alternatives, like bonds or money-market funds, stocks appear to offer a better reward.
The Labor Department reported that the number of Americans seeking unemployment benefits fell sharply last week. Analysts said it’s a possible sign that a slowdown in hiring last month may have been temporary.
Rite Aid soared 16 percent after the drugstore chain said higher sales of generic drugs and lower costs helped it post better earnings than analysts had expected. Stronger profits at Bed Bath & Beyond pushed its stock up 3 percent.
In U.S. government bond trading, the yield on the 10-year Treasury note dipped to 1.78 percent from 1.80 percent late Wednesday.