Retailers are used to throwing big sales. On Tuesday, it was investors who unloaded shares in several big retail chains, dragging down U.S. stocks and wiping out small gains from a day earlier.
Disappointing earnings from Staples, Dick's Sporting Goods, Urban Outfitters and others triggered the selling spree.
The downturn in retail stocks came in a slow week for economic news and ahead of the Memorial Day weekend, which contributed to lighter-than-usual trading volumes. The weakness stirred fresh concerns about the retail sector and the outlook for consumer spending in the U.S.
"The fact that we're seeing such widespread weak growth among retailers means many (investors) are extrapolating that to the rest of the year," said Kate Warne, an investment strategist at Edward Jones.
Dick's Sporting Goods plunged 18 percent after its earnings and revenue fell short of what investors were expecting. The stock fell $9.56 to $43.60. Staples dropped 13 percent after the office supply chain said its earnings fell sharply in the latest quarter. Staples slid $1.68 to $11.71.
Also reporting weak sales: Urban Outfitters and TJX, the parent company of T.J. Maxx, Marshalls and other stores. Urban Outfitters dropped $3.19, or 8.8 percent, to $32.98. TJX shed $4.45, or 7.6 percent, to $53.95.
Home Depot bucked the trend, even though its latest quarterly results fell short of Wall Street's expectations. The home improvement retailer said a key sales metric improved despite a slow start to the spring home-selling season. The company also raised its full-year earnings forecast. Its stock climbed $1.46, or 2 percent, to $77.96.
U.S. index futures fell early Tuesday, before the opening of regular stock trading, as investors reacted to the dismal earnings results. The market opened lower and remained in the red the rest of the day. The selling accelerated around midday.
"It seems like this is more about taking some profits on stocks that have enjoyed some nice profits and kind of reassessing as to what they want to do with their investments," said JJ Kinahan, chief strategist at TD Ameritrade.
The Standard & Poor's 500 index fell 12.25 points, or 0.7 percent, to close at 1,872.83. The index is up 1.3 percent for the year.
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