US stocks: Dow ends lower as Wal-Mart sales drag

NEW YORK - Blue chips ended lower on Monday (NY time), under pressure from disappointing Thanksgiving sales from No. 1 retailer Wal-Mart Stores Inc., while tech stocks drew support from Apple Computer Inc. and drove the Nasdaq to its highest close in 10 months.

Dow component Wal-Mart fell nearly 4 per cent after it slashed its forecast for November sales on Saturday, saying customer traffic slowed toward the end of the week.

Shares of Apple jumped more than 6 per cent after brokerages raised their price targets on the maker of the iPod musical device.

The forecast fuelled concerns that high oil prices and lacklustre job and wage growth may cut into consumer spending in the critical holiday shopping period, particularly among lower-income earners.

The Dow Jones industrial average fell 46.33 points, or 0.44 per cent, to finish at 10,475.90, while the Standard & Poor's 500 Index was down 4.08 points, or 0.34 per cent, to close at 1,178.57. The Nasdaq Composite Index was up 4.90 points, or 0.23 per cent, to end at 2,106.87.

"Retail was clearly the story today," said John Caldwell, chief investment strategist at McDonald Financial Group.

"Everybody is talking about the Wal-Mart numbers and how disappointing they are, but the reality is that Wal-Mart has been gradually ratcheting back their sales numbers this year. There has been almost a direct correlation as oil and gas prices have been moving higher."

Trading was active with 1.4 billion shares changing hands on the New York Stock Exchange, equal to the 1.4 billion daily average for last year. About 1.8 billion shares were traded on Nasdaq, above the 1.69 billion daily average last year.

On the NYSE, the number of declining stocks outnumbered advancing issues by nearly 4 to 3. On Nasdaq, advancers led decliners by about 9 to 7.

Apple climbed US$3.89 to US$68.44 after Merrill Lynch raised its price target to US$78 from US$61 on expectations of increased sales of iPod, Apple's digital music player. Brokerage firm UBS also increased its price target for Apple to US$77 from US$66.

The tone of the first weekend of holiday shopping was summed up as "muted optimism" by Banc of America Securities analyst Aram Rubinson in a note to clients.

Still, MasterCard reported a 9.3 per cent rise in transactions this past weekend, while Visa USA posted a 14.3 per cent increase, with deeply discounted electronics, toys and clothing in hot demand.

Wal-Mart's stock slid US$2.17 to US$53.15.

Shares of US home builders fell as a sell-off in the US Treasuries market helped stoke fears of higher interest rates. The Dow Jones US Home Construction Index was off 3 per cent.

Shares of industry leader D.R. Horton Inc. slid nearly 3 per cent, or 90 cents, to US$35.21, while Pulte Homes Inc. shares dropped 3.7 per cent, or US$2.13, to US$55.46.

Shares of Kellogg Co. fell 3.4 per cent after the cereal maker named James Jenness as chairman and chief executive, replacing Carlos Gutierrez, who is stepping down after being nominated as the US commerce secretary. The stock was down US$1.54 at US$43.47.

- REUTERS