Stocks Close Flat on Economic Woes

Stocks fell nominally as investors got fresh, yet largely unsurprising, evidence of the U.S. economic stagnation, along with mixed news about July retail sales.

A mixed batch of retail sales reports were among the latest causes of investor jitters, after retailers like Abercrombie & Fitch reported a bigger-than-expected drop in July sales.

The economic outlook was no less grim, following a rise in jobless claims and Wednesday's downbeat "beige book" summary of regional economic conditions released on Wednesday, painted a picture of lagging growth.

"There are all these incremental pieces of news showing that the economy is still slowing — there's nowhere to run to and no place to hide, " said Donna Van Vlack, director of trading at Brandywine Asset Management.

Major stock indexes pulled up from their session lows, struggling back after Wednesday's brutal session, but analysts were doubtful the market would make a significant come-back.

"At this point, who isn't a skeptic?" said Charles Payne, analyst at Wall Street Strategies. "We're getting all kinds of contradictory signals from the market. At least on a short-term basis, I think everyone would have to agree that the market is oversold, but that still doesn't mean it's going to rebound."

The Dow Jones industrial average edged up 5.06 points, or 0.05 percent, to 10,298.56, according to the latest data, while the Nasdaq composite slipped 3.04 points, or 0.16 percent, to 1,963.32, escaping by four points a nearly four-month closing low. The benchmark Standard & Poor's 500 index fell 0.10 of a point to 1,183.43.

Economic Data Depresses Investors

Heightening worries about the nation's economy, the Labor Department said the number of Americans seeking first-time claims for jobless benefits jumped by 33,000 in the latest week, more than economists surveyed by Reuters had expected.

In addition, retailers slammed Wall Street with disappointing sales.

Still, some traders said the bad news was widely expected, providing some ballast to an already pounded stock market.

Among retailers, Gap Inc. fared the worst, the stock dropping $1.57, or 5.8 percent, to $25.60 after the No. 1 U.S. apparel chain said sales at stores open year or longer fell a greater-than-expected 12 percent in July from a year ago. Gap also said may eliminate another 790 jobs, on top of 1,300 layoffs announced last month.

Most U.S. department stores and apparel chains have seen sales and profits sag since the fourth quarter as shoppers curb spending on clothing and other items they deem nonessential. Analysts now look to first half 2002 for any meaningful recovery.

Wal-Mart the nation's largest retailer, said same-store sales in July rose 6 percent from a year ago, above its expectations. Analysts had forecast an increase of 4 percent to 8 percent, compared with year-ago growth of 6.5 percent. Wal-Mart shares fell 36 cents to $54.17.

Wednesday’s Dismal Data

The Beige Book report issued by the Federal Reserve on Wednesday worried investors after it said weakness in the factory sector was seen in almost all regions.

The grim tone added to negative sentiment in the stock market on Wednesday. The Dow Jones industrial average ended the day down 165.24 points, while the Nasdaq composite fell 61.43 points, putting it once again below the 2000 barrier.

The Nasdaq 100 closed at 1,626 on Wednesday, below a key support level of 1,680, Sheinberg said.

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