US Stocks Pare Losses As Retail Stocks Rise




U.S. stocks pared early Thursday losses as investors eyed encouraging earnings and stronger January sales among retailers, against a backdrop of continued unrest in Egypt.

The Dow Jones Industrial Average was off 6 points, or 0.1%, to 12036 recently. Leading the Dow's decliners, Merck fell 2.7% after swinging to a fourth-quarter loss. While earnings and revenue topped Wall Street's expectations, the drug maker's forecast for full-year adjusted earnings fell below analysts' predictions.

The Nasdaq Composite edged up 1 point to 2750. The Standard & Poor's 500-stock index shed 0.1% to 1303, though consumer discretionary stocks kept the losses in check.

Among retail's gainers, AutoNation's fourth-quarter profit climbed 9.1%, topping analysts' estimates, as the automotive retail dealer reported higher sales of both new and used vehicles. Shares rose 7.8%.

Limited Brands rose 6.3%, after posting a 24% jump in same-store sales for January and raising its guidance for its quarter, which closes at the end of this month.

"The backdrop is, the U.S. economy is still in an improving state, and the majority of the economic data supports that, whether we're talking about retail sales or the GDP report," Jason Pride, director of investment strategy at Glenmede Investment and Wealth Management said.

The market's early mood was subdued as clashes between protesters and supporters of the Egyptian regime spilled over into violence, prompting the military to fire bursts of warning shots and reposition tanks to keep the two sides apart.

However, oil prices edged down in recent trading.

Labor data were a bright spot on Thursday, encouraging optimism for Friday's monthly report. The number of U.S. workers filing new claims for unemployment benefits fell 42,000 to 415,000 in the week ended Jan. 29, the Labor Department said in its weekly report. Economists had expected a drop of 31,000 to 423,000.

Boosted by the data, the U.S. dollar strengthened against both the yen and the euro. The U.S. Dollar Index, which tracks the U.S. currency against a basket of others, rose 0.9%. The euro slumped more than 1% after European Central Bank President Jean-Claude Trichet's comments at a press conference disappointed those hoping an interest-rate rise could come soon. The euro was trading recently at $1.3629, down from $1.3810 late Wednesday in New York.

In the U.S., retailers strengthened as reports from last month showed shoppers largely shrugged off bad weather to help January same-store sales top expectations. Among retailers whose sales last month surpassed analysts' forecasts, Zumiez rose 1.3%, Macy's added 0.5% and Costco, which has more stores in areas that saw fewer winter storms, gained 3%.

TJX, parent of off-price chains T.J. Maxx and Marshalls, also reported January same-store sales that topped analysts' views and said it expects fourth-quarter earnings to beat the forecast it raised last month. Shares rose 3.5%.

BJ's Wholesale Club's January same-store sales climbed 2.7%, or 0.3% excluding the impact of gasoline sales. The warehouse-club retailer also said it will consider options, including a potential sale of the company, sending share surging 13%.

Among companies reporting earnings, cereal maker Kellogg added 2.2% after its fourth-quarter earnings rose 7.4% as the food manufacturer benefited from some lower expenses, though revenue and margins weakened.

In other economic data, the Institute for Supply Management's index of non-manufacturing activity rose to 59.4 in January, topping forecasts for a 57.0 reading. Meanwhile, the Commerce Department said U.S. factory-goods orders unexpectedly rose in December, climbing 0.2%, surprising analysts who had expected a 0.5% decline.

Separately, nonfarm business productivity rose at a 2.6% annual rate in the fourth quarter, surpassing analysts' expectations for a 2.1% increase. The report also showed that unit labor costs--a key gauge of where prices are heading--fell at a 0.6% annual rate last quarter, surprising analysts who had forecast a 0.1% gain.