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Wall Street knocked back by poor retail sales figures

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US stocks have closed lower after an unexpected fall in retail sales in June, the third consecutive drop that fuelled concerns about the strength of consumer spending, a key driver of the economy.

The Dow Jones Industrial Average lost 49.88 points (0.39 per cent), closing at 12,727.21, trimming earlier losses.

The S&P 500-stock index fell 3.14 (0.23 per cent) to 1,353.64, while the tech-heavy Nasdaq slid 11.53 (0.40 per cent) to 2,896.94.

US retail sales fell by 0.5 per cent last month, the Commerce Department reported. Most analysts estimated they climbed 0.2 per cent.

“The downtrend in retail sales does not augur well for the overall economy,” said Dick Green at Briefing.com. Consumer spending accounts for about 70 per cent of economic activity.

Robert Brusca at FAO Economics said the weak numbers could hit gross domestic product growth in the April-June period “and leave us with a GDP result of 1.0 per cent to 1.5 per cent in Q2,” after 1.9 per cent in the first quarter.

Adding to the bearish mood, the International Monetary Fund trimmed its global growth forecast for the rest of the year, citing “signs of further weakness.”

On the blue-chip Dow, JPMorgan Chase led decliners, slumping 2.7 per cent. Caterpillar and Alcoa each fell 1.1 per cent and Home Depot dropped 1.2 per cent.

American Express was the biggest gainer, up 1.2 per cent.

Citigroup added 0.7 per cent after reporting second-quarter earnings that topped Wall Street expectations.

Microsoft edged up 0.2 per cent. The software giant parted company with NBC News, pulling out of their joint venture MSNBC to launch its own online news service. Comcast, parent of NBC News, slipped 0.1 per cent.

Human Genome Sciences leaped 4.5 per cent after agreeing to be bought by British drugmaker GlaxoSmithKline for about $3 billion. GSK’s US-traded shares added 0.7 per cent.

The retreat came after US stocks broke a six-day losing streak Friday, helped by better-than-expected quarterly earnings results from banks JPMorgan and Wells Fargo.

Bond prices rose. The 10-year Treasury yield dropped to 1.46 per cent from 1.50 per cent Friday, while the 30-year fell to 2.55 per cent from 2.58 per cent.

Bond prices and yields move in opposite directions.