Weak Macy's results hit retailers, US stocks

NEW YORK (AFP) - Retailers' shares were hammered on Thursday (May 11), weighing on US stocks, after weak earnings from Macy's reignited worries about the sector's prospects with the rise of e-commerce.

Macy's plunged 17 per cent after reporting a 39 per cent drop in first-quarter earnings to US$70 million (S$98 million).

Analysts at GlobalData Retail called the results, which included sharply lower comparable sales, "decidedly gloomy."

The results led to a selloff of other leading retail stocks, including Gap, down 3.7 per cent, Nordstrom, down 7.6 per cent, and Target, down 4 per cent.

Those drops weighed on the wider market, along with lingering worries about President Donald Trump's firing of FBI director James Comey. Analysts also said investors had incentives to take profits after the rally over the last month.

"It's more-or-less profit taking and maybe some creeping worries over the firing of Comey," said Peter Cardillo, chief market economist at First Standard Financial.

"Of course, we haven't seen any fear factor developing over that, but if the situation should worsen, the market could be subject to that."

The Dow Jones Industrial Average dipped 0.1 per cent to 20,919.42.

The broad-based S&P 500 dropped 0.2 per cent to 2,394.44, while the tech-rich Nasdaq Composite Index shed 0.2 per cent to 6,115.95, ending a four-day streak of records.

Snapchat parent Snap, meanwhile plummeted 21.5 per cent after posting a loss of US$2.2 billion in its first quarterly results since its share offering earlier this year.

Wells Fargo fell 1.8 per cent as it announced plans to cut an additional US$2 billion in costs each year while it aims to restore its reputation following a fake bank accounts scandal.

The cybersecurity company Symantec fell 5.1 per cent after projecting earnings of between 28 and 32 cents for the first quarter of fiscal 2018, below the 38 cents analysts expected.