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Friday 21st of November 2008
May 16, 2006

Retail takes Wall Street lower


by Elaine Frei

In the New York equities markets on Tuesday, investors were disappointed with newly reported profits in the retail sector, despite the fact that in some cases profits had gone up more than had been expected. This disappointment, coupled with a decline in housing starts, sent the New York markets lower at mid-day. The Dow Jones Industrial Average was down 0.1 percent to 11,414.69, while the Nasdaq Composite dropped 0.5 percent to 2,226.46 and the S&P 500 declined by 0.2 percent to 1,291.35.

Among retailers, Wal-Mart was up on the day but Home Depot and Staples both declined. Wal-Mart showed a 6 percent increase in profits in the quarter, more than had been expected after a warning earlier that high energy prices could cut into earnings. At mid-session, Wal-Mart was 1.4 percent higher to $48.10.

Home Depot said it saw profits up by 19 percent in the first-quarter, higher than had been expected, but it said it was not happy with core retail sales. Investors picked up on that disappointment and shares in the home-improvement retailer were down 3.2 percent to $39.22.

Office supplies retailer Staples was down 6 percent to $24.83 on same-store sales that were up just 1 percent, even though it also reported a substantial rise in profits. Staples has had a hard time of it during the year, gaining only 16 percent since the beginning of the year even before the day’s declines, while its rivals Office Max and Office Depot have added 69 and 38 percent respectively in the same period.

Elsewhere, Apple Computer was down 2.7 percent to $65.95 after Creative Labs, based in Singapore, filed suit against Apple alleging patent infringement on CL’s Zen brand digital music player.

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