) profits missed analyst estimates and oil prices surged to a 21-year high on fresh fighting in Iraq.
The Dow Jones industrial average was down 123.58 points, or 1.24%, at 9,814.74. The broader Standard & Poor's 500 index declined 12.55 points, or 1.17%, to 1,063.24. The tech-heavy Nasdaq fell 29.93 points, or 1.68%, at 1,752.49.
Looking ahead, investors will seek direction from economics news on Friday. Among the much-anticipated reports will be a reading of wholesale price inflation in July. The producer price index is expected to tick up 0.3% in the month vs. a 0.3% decline in the previous month. Excluding volatile food and energy prices, the index is seen rising only 0.1% vs. a 0.2% increase in June.
Meantime, consumer sentiment is expected to have dipped slightly in August. The University of Michigan sentiment index is seen falling to a reading of 96, vs. a 96.7 figure in July.
Earnings news will be more subdued with results expected from AVANIR Pharmaceuticals (AVN
) and Overland Storage (OVRL
Energy remained uppermost in the market's mind Thursday. U.S. light crude oil rose 85 cents to a 21-year record high of $45.65 a barrel on the New York Mercantile Exchange after fighting in Iraq raised fears of more production problems.
Investors also considered a disappointing report from a leading technology name. Hewlett-Packard, which makes computers and printers, blamed weak results in its servers and storage products used by big businesses and organizations for the disappointing news. H-P's report added to investor concerns about the strength of the tech sector after downbeat news in the previous session from Cisco Systems (CSCO
Investors awaited a further read of the sector's health from Dell (DELL
), which reported results after the bell Thursday. The computer maker posted fiscal second quarter earnings per share of 31 cents, up 29% from a year earlier, on 20% revenue growth. The shares moved higher in after-hours trading after finishing lower in Thursday's regular session.
On the economics front, U.S. retail sales in July rose by a less-than-expected 0.7%, or by 0.2% when autos were not included. Expectations were for gains of 1.1% and 0.4%, respectively, according to research outfit Informa Global Markets. "This is a bit disappointing," Informa says, though it points out that June sales were revised to -0.5% from -1.1%, so the sting is not so bad.
Meanwhile, business inventories rose 0.9% in June, with sales up 0.1%, while the median estimate was for a 0.6% rise in inventories. Informa Global Markets says the sharp rise in inventories was driven by gains in all categories -- factory stocks up 0.7%, wholesale and retail stocks up 1.1% each. Informa noted that the results point to an upward revision to GDP of about 0.04%, excluding any impact from prices.
Outside the tech sector, corporate news was mixed. Wal-Mart, the world's largest retailer, posted higher-than-expected quarterly profits sales of back-to-school clothes and other high-profit items offset pokey summer sales.
And American Eagle Outfitters (AEOS
), the clothing retailer, said its quarterly earnings more than tripled thanks to sales growth.
But Tiffany (TIF
), the luxury jeweler, posted 11% lower profits and blamed smaller margins and lower sales in Japan.
Treasuries finished higher in price, with yields heading lower after strong results from the final leg of the Treasury's quarterly refunding. The yield on the benchmark 10-year note fell to around 4.25%.
The weekly jobless claims data released Thursday caught some attention, as they suggest the labor market is not worsening. Initial jobless claims fell by 4,000 to a 333,000 level in the week ended Aug. 7, while the 4-week moving average also dipped by over 4,000 to 339,300. The data still points to stable to modest job growth and thus supports the Fed's measured plan to hike rates, Informa says.
European stock markets closed mixed on Thursday. London's Financial Times-Stock Exchange 100 index was up 15.90 points, or 0.37%, to 4,328.10. Royal & Sun Alliance was higher after posting pretax operating profit ahead of expectations and predicted a "strong" second half. BOC Group was up on news that a U.S. appeals court overturned most of a $174 million jury ruling against the company and its Fluorogas unit in Texas.
In Germany, the DAX index was lower by 20.80 points, or 0.57%, to 3,658.11 as German preliminary second quarter GDP growth edged up to 0.5% from 0.4% in the first quarter, in line with expectations. MAN AG was lower as the truckmaker's reiteration of its outlook for full-year profit disappointed some investors. FJH AG was lower as the company's first-half sales fell 41%, which prompted WestLB to cut its recommendation on the shares to "sell".
In Paris, the CAC 40 index lost 8.72 points, or 0.25%, to 3,494.23 as French flash second quarter GDP rose 0.8%, which bit better than market expectations of 0.6%. Altran was lower after warning about first half results.
Asian stock markets closed mixed. Japan's Nikkei 225 index shed 21.39 points, or 0.19%, to 11,028.07, as semiconductor stocks extended losses. Advantest Corp slipped 1.33%, Tokyo Electron fell 1.95% and Rohm was down 2.71%. Investors also dumped shares of brokerages amid growing concerns about the domestic market's outlook following U.S. economic uncertainty and stubbornly high oil prices. Nomura Holdings inched down 0.65%.
In Hong Kong, the Hang Seng index added 70.30 points, or 0.57%, to 12,413.43. Lenovo skyrocketed 9.88% after posting strong quarterly results. Cathay Pacific fell 1.5% after releasing disappointing interim results.