NEW YORK (AP) — Investors got a sharp reminder Thursday that the economy still has some weak spots.
Bed Bath & Beyond and Family Dollar plunged after cutting their earnings forecasts following a disappointing holiday season. Other retail stocks also fell sharply even as the broader stock market ended little changed.
The reports of weak sales disappointed investors, who had seen signs for several weeks that the U.S. economy was improving and that shoppers were returning to the malls.
"The consumers are supposed to be the fuel of this economy, and it doesn't appear to be happening," said Ian Winer, director of trading for Wedbush Securities. "If they're not spending money at the retailers, what's going on?"
The Dow Jones industrial average fell 17.98 points, or 0.1 percent, to close at 16,444.76. The Standard & Poor's 500 index added 0.64 points, or less than 0.1 percent, to 1,838.13 and the Nasdaq composite lost 9.42 points, or 0.2 percent, to 4,156.19.
The worst performer in the S&P 500 index was Bed Bath & Beyond, which plunged $9.93, or 13 percent, to $69.75. Family Dollar fell $1.37, or 2 percent, to $64.97.
L Brands, which owns Bath and Body Works and Victoria's Secret, reported that its sales rose less than analysts had expected. The company also cut its full-year outlook. L Brands fell $2.44, or 4 percent, to $57.75.
Even the bright spots in the retail industry had caveats. Department store giant Macy's jumped $3.96, or 8 percent, to $55.80 after the company forecast a 2014 profit that was above Wall Street's forecasts. At the same time, Macy's said it would eliminate 2,500 jobs as part of a reorganization that aims to save $100 million a year.
The disappointing news from retailers was more than enough to offset another positive report on the U.S. economy.