Wall Street: Tuesday close

13 April 2012

WALL Street took a sharp downward turn Tuesday as investors interpreted a big jump in retail sales as a harbinger of an earlier-than-expected rise in interest rates. The Dow Jones industrial average gave up early gains, falling more than 130 points by the close.

The sell-off was spurred by the Commerce Department's report of a 1.8% increase in retail sales for March, the biggest jump in a year. It was three times greater than the 0.6% hike economists expected.

That raised the specter of inflation, and investors worried that the Federal Reserve would raise interest rates soon to keep the economy from growing too fast.

While the retail data helped the markets open higher, the major indexes quickly slipped into negative territory and fell sharply in afternoon trading. By the close, the Dow was off 134.28 at 10,381.28. The Nasdaq composite index fell 35.4 to 2,030.08.

The selling was broad, with every major sector losing ground, since rising interest rates could make borrowing difficult for most companies.

Strong sales and favorable exchange rates spurred a 20% hike in profits at Johnson & Johnson, which beat estimates by 3 cents per share and gained 19 cents to $51.39. Merrill Lynch, meanwhile, slumped $1.12 to $58.61 after posting record first-quarter earnings of $1.22 per share, beating analysts expectations by 15 cents per share.

Media company Dow Jones fell $1.01 to $47.94 after reporting a 73% drop in first-quarter earnings due to a one-time gain a year ago. The publisher of the Wall Street Journal beat analysts' expectations by 2 cents per share, however.

Intel was up 7 cents at $27.67 in advance of its earnings report, due after the close of trading Tuesday.

Declining issues outnumbered advancers by more than 6 to 1 on the New York Stock Exchange, were volume was moderate.

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