Retail Miss, Commodity Slide Triggers Market Retreat

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Wall Street experienced its first pullback of the month on Tuesday as slower-than-expected January retail sales and a retreat in commodity stocks gave the bulls pause.

Today's Markets

The Dow Jones Industrial Average fell 41.55 points, or 0.34%, to 12226.64, the Standard & Poor's 500 declined 4.31 points, or 0.32%, to 1328.01 and the Nasdaq Composite lost 12.83 points, or 0.46%, to 2804.35. The FOX 50 slid 3.36 points, or 0.35%, to 945.19.

Aside from the so-so read on January retail sales, the bulls were not excited by an eight-month high in a regional manufacturing report or the buyout of Big Board parent NYSE Euronext (NYSE:NYX) to Germany's Deutsche Boerse.

The retreat ate just slightly into February’s hot start and backed the blue chips and S&P 500 away from recently-hit two and-a-half-year highs.

“We’re certainly due for a little bit of a pause, whether it’s buyer’s exhaustion or an overextension,” said Michael James, managing director of equity trading at Wedbush Securities. “Buyers have become a little more patient. It’s going to take couple of days to see if there’s any legs to this.”

The heaviest selling was felt by the energy and basic materials sector as stocks like energy heavyweight ExxonMobil (NYSE:XOM) and mining giant Rio Tinto (NYSE:RIO) fell.

Tuesday’s slide marked Wall Street’s worst day since January 28, when the blue chips tumbled 166 points amid fears about turmoil in Egypt spreading to oil-producing nations.

Most of the Dow's 30 stocks lost ground, led by Boeing (NYSE:BA) and ExxonMobil. The index's best performers were Verizon (NYSE:VZ) and Traveler's (NYSE:TRV).

The Nasdaq Composite, which on Monday hit its highest level since November 2007, also slid amid weakness from tech stocks such as Nvidia (NASDAQ:NVDA) and Dell (NASDAQ:DELL).

Wall Street's negative stance began after the Commerce Department said retail sales inched up just 0.3% in January, trailing forecasts for a jump of 0.5%. Excluding autos, sales were also up 0.3%, half as much as had been anticipated. The weaker-than-expected report weighed on retailers like Macy's (NYSE:M) and Best Buy (NYSE:BBY).

On the other hand, the New York Fed said its Empire Manufacturing index jumped this month to 15.43 -- its highest level since June and well above January's 11.92 level. Economists had expected a slightly smaller rise to 15.0. Yet manufacturing stocks such as Honeywell (NYSE:HON) and United Technologies (NYSE:UTX) closed in the red, perhaps amid concern about signs of inflation hidden in the report.

Also, on the economic front, the Labor Department said import prices rose 1.5% in January, almost doubling Wall Street's expectations amid rising energy costs. Export prices were up 1.2%, also above consensus calls. The Commerce Department said business inventories grew by 0.8% in December, doubling November’s rise and slightly topping forecasts.

Basic materials stocks such as Freeport McMoRan (NYSE:FCX) suffered the steepest pullback as commodities like corn and copper sold off. After taking its biggest tumble in three weeks, copper settled at  $4.5315 a pound, down 1.98%. Gold gained $9.00 a troy ounce, or 0.66%, to $1,373.60.

The energy sector was hurt by falling prices across the board. Crude oil fell 49 cents a barrel, or 0.58%, to $84.32, while Nymex RBOB gasoline slid 1.14% a gallon to $2.4888.

Meanwhile, shares of NYSE Euronext dropped as much as 5% after it unveiled a deal to sell itself to Deutsche Boerse, handing over control of the New York Stock Exchange to a German company and creating the world’s largest market operator. Under the terms of the deal, each NYSE Euronext shareholders will own 40% of the company and their shares will be converted into 0.47 of a share of the new holding company, giving NYSE a 10% premium.

Corporate Movers

CIT Group (NYSE:CIT) slid 6% amid disappointment with its EPS of 37 cents on revenue of $505.8 million. Analysts had expected the commercial lender to earn 40 cents a share.

Gap (NYSE:GPS) jumped 6% after hedge fund billionaire and Sears (NASDAQ:SHLD) chairman Edward Lampert disclosed having a 5.8% passive stake in the retailer.

Barclays (NYSE:BCS) beat estimates with a pretax annual profit of 6.1 billion pounds, or $9.8 billion, driven by a 30% dive in losses from bad debts to 5.7 billion pounds.

Sirius XM (NASDAQ:SIRI) slumped 7% after disclosing an unexpected fourth-quarter loss of 2 cents a share on weaker-than-expected sales of $735.9 million. Analysts had expected a breakeven period. The satellite radio provider said net subscribers grew last quarter by 328,789 to 20.2 million.

FedEx (NYSE:FDX) downgraded its third-quarter non-GAAP EPS view to 70 cents to 90 cents, well below its earlier view of 95 cents to $1.15. The midpoint of the new range would miss the Street's view. FedEx blamed the more cautious outlook on severe weather and higher fuel prices.

Global Markets

The U.K.'s FTSE 100 slid 0.38% to 6037.08, Germany's DAX gained 0.05% to 7400.04 and France's CAC 40 advanced 0.33% to 4110.34.

In Asia, Japan's Nikkei 225 closed up 0.20% to 10746.70, Hong Kong's Hang Seng slumped 0.96% to 22899.80 and China's Shanghai Composite ended unchanged at 2899.24.