Stocks Retreat From Highs on Disappointing Earnings

By Riva Gold and Akane Otani Features Dow Jones Newswires

U.S. stock indexes pulled back Thursday, as disappointing earnings reports dragged shares of consumer-discretionary companies lower.

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The Dow Jones Industrial Average fell 78 points, or 0.4%, to 20865. The S&P 500 lost 0.5%, and the Nasdaq Composite shed 0.5%.

Thursday's moves put major indexes on course for one of their biggest declines of the month. While individual stocks have swung in response to corporate earnings reports, stock indexes have barely budged in recent sessions, hovering around all-time highs just as volatility has faded.

"Right now, there's a sense that things are pretty good economically and from an earnings perspective, and that should continue" said Brad McMillan, chief investment officer at Commonwealth Financial Network. "Investors are more willing to move into the market, and less skittish to downturns."

Consumer-discretionary shares in the S&P 500 fell 0.8% on Thursday, one of the worst-performing sectors in the broad index, after retail giants including Macy's and Kohl's posted tepid quarterly results. Shares of Macy's shed 14% after the firm reported a bigger-than-expected slide in revenue for the first quarter, while Kohl's, which said same-store sales fell more than expected, lost 7%.

Technology shares, one of the best performers in the stock market this year, fell 0.5% in the S&P 500. Shares of Snapchat parent Snap plunged 19% after the company said Wednesday afternoon that it was struggling to maintain strong user growth.

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Government bonds climbed, with the yield on the 10-year U.S. Treasury note slipping to 2.402%, according to Tradeweb, from 2.414% Wednesday. Yields fall as bond prices rise.

Elsewhere, the British pound was down 0.5% against the U.S. dollar at $1.2882 after the Bank of England kept its rates unchanged on Thursday and forecast steady growth for the U.K. in the coming years, as long as it exits from the European Union smoothly.

"A lot of people were looking for a potential second dissenter [on a rate rise]," said Tim Graf, head of macro strategy for EMEA at State Street Global Markets, noting some investors were also likely reacting to the BOE's modest tweaks to its growth and inflation forecasts.

Still, on the whole, "I don't look at this as a major shift," Mr. Graf said.

The Stoxx Europe 600 slid 0.5%, weighed down by declines in shares of banks, oil-and-gas companies and technology firms.

Earlier, Japan's Nikkei Stock Average rose 0.3% and Hong Kong's Hang Seng Index added 0.4%, with both indexes finishing at their highest levels since 2015. South Korea's Kospi climbed 1.2% to a fresh closing record.

Write to Riva Gold at riva.gold@wsj.com and Akane Otani at akane.otani@wsj.com

(END) Dow Jones Newswires

May 11, 2017 12:15 ET (16:15 GMT)