NEW YORK — NEW YORK -- U.S. stocks fell yesterday on concern about the economy and the direction of interest rates.
Retailing issues paced the market's retreat as some of the nation's biggest chains reported disappointing May sales. "With the stock market at record levels, not having good news makes for nervous investors," said Barry Berman, head trader at Robert W. Baird & Co. in Milwaukee.
The Dow Jones industrial average declined 8.58, to 3,544.87, closing above its session low of 3,531.86. Sears, Roebuck & Co. and Woolworth Corp., the two retailing stocks in the Dow industrials, both contributed to the decline.
Standard & Poor's 500-Stock Index lost 1.35, to 452.50, and the New York Stock Exchange Composite Index dropped 0.68, to 249.59. Declining common stocks led advancing issues by more than 8-to-7 on the Big Board. Trading on the New York Stock Exchange was active, with about 285 million shares changing hands.
The Nasdaq Combined Composite Index bucked the trend, gaining 0.36, to 706.22. The American Stock Exchange Market Value Index rose 0.94, to a record 440.91.
"The retail sales reports put a damper on the market," said Daniel Marciano, senior vice president in equity trading at Dillon, Read & Co. "Seasonally, sales just weren't as strong as analysts were expecting."
For example, Dayton Hudson Corp. said revenue from shops open at least one full year rose just 1.1 percent last month. The retailer also said it expects second-quarter earnings to be substantially below the year-ago level. Dayton Hudson's stock fell $3.25, to $66.125.
The retail sales reports followed disappointing jobless statistics. The Labor Department said this morning that workers filing first-time unemployment claims rose 5,000 last week, to 344,000. The increase in jobless claims was above economists' estimates, which called for an increase of about 3,000.
More evidence of the economy's health will arrive this morning, when the employment statistics for May are released. The government is expected to report that the economy added 136,000 non-farm jobs in May and that the unemployment rate remained at 7 percent for the third straight month, according to a survey of economists by Bloomberg Business News.
Investors are betting on the economic recovery remaining sluggish and inflation staying down, said Thom Brown, managing director at Rutherford, Brown & Catherwood Inc. This combination translates into low interest rates.
As long as rates are low, stocks are a more attractive investment on a relative basis than fixed-income securities, such as Treasury bonds, Mr. Brown said. The yield on the benchmark 30-year Treasury bond was at 6.86 percent late yesterday, down one basis point on the day.
Allstate's stock rose to $29.50 in its first day of trading, or $2.50 above the initial public offering price. The insurance company raised more than $2.12 billion in the biggest initial public offering in U.S. history.
Telefonos de Mexico fell $1.50, to $46.25, after the Mexican telecommunications company said it hasn't proceeded with plans to buy back $300 million of stock. The company also said second-quarter income would be weaker than expected.