Stocks Retreat on Disappointing Earnings

By Akane Otani and Riva Gold Features Dow Jones Newswires

U.S. stock indexes pulled back, as disappointing earnings reports put pressure on shares of consumer-discretionary companies.

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Major indexes initially headed toward one of their biggest declines of the month as retail stocks slid, then pared losses heading into the afternoon.

While individual stocks have sold off following corporate earnings reports, stock indexes have barely budged in recent sessions -- a trend some investors have attributed to data showing the U.S. economy is on solid footing.

"Investors are more willing to move into the market, and less skittish to downturns," said Brad McMillan, chief investment officer at Commonwealth Financial Network.

The Dow Jones Industrial Average fell 23.69 points, or 0.1%, to 20919.42 on Thursday. The S&P 500 lost 5.19 points, or 0.2%, to 2394.44 and the Nasdaq Composite shed 13.18 points, or 0.2%, to 6115.96.

Consumer-discretionary shares in the S&P 500 fell 0.6%, posting the biggest decline among the S&P 500's 11 sectors, after retail giants including Macy's and Kohl's posted tepid quarterly results.

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Shares of Macy's shed $4.99, or 17%, to $24.35 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 3.16, or 7.8%, to 37.16.

Shares of Snapchat parent Snap dropped 4.93, or 21%, to 18.05 after the company said Wednesday afternoon that it was struggling to maintain strong user growth.

Even with several companies reporting worse-than-expected quarterly results this week, the S&P 500 is on track to post 13% year-over-year earnings growth for the first quarter, according to FactSet.

"You have your normal first-quarter seasonal issues," said David Donabedian, chief investment officer of CIBC Atlantic Trust Private Wealth Management, who cited the weaker-than-expected GDP reading from the first few months of the year, "but generally, the first-quarter earnings season gave equities a good boost."

Government bonds edged higher, with the yield on the 10-year U.S. Treasury note slipping to 2.400% from 2.414% Wednesday. Yields fall as bond prices rise.

Elsewhere, the British pound was down 0.4% against the U.S. dollar at $1.2891 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. The Stoxx Europe 600 slid 0.5%.

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

(END) Dow Jones Newswires

May 11, 2017 16:48 ET (20:48 GMT)