(Updates to early afternoon, changes byline)
By Kristina Cooke
NEW YORK, April 14 (Reuters) - U.S. stocks inched lower on
Monday after an unexpected quarterly loss from Wachovia Corp
<WB.N> hurt bank shares, overshadowing a surprise rise in March
retail sales.
Goldman Sachs added to the market's negative tone after it
said the quarterly earnings season, which is just starting,
looks "awful" and that reports still to come will be generally
disappoint and drive the S&P 500 lower in coming weeks.
Wachovia said it would cut its dividend, eliminate jobs and
raise capital of $7 billion after becoming the latest casualty
of the global credit crunch. For details, see [].
The No. 4 U.S. bank's stock fell 10 percent, dragging the S&P
financial sector index <.GSPF> down 2.1 percent.
But retail sales kept a floor under the market after data
showed a modest increase in March, pushed up by a jump in
gasoline sales, according to a government report. An S&P index
of retailers' shares <.RLX> was up 0.7 percent. Energy
companies also helped, giving the biggest boost to the S&P 500
as the price of oil <CLc1> rose above $111 a barrel for a
time.
With earnings season in full swing, investors are taking
their trading cues from corporate results. Wall Street analysts
expect S&P 500 earnings to show a 13.8 percent decline in
quarterly profits compared with an 11.8 percent drop projected
one week ago, according to Reuters Estimates.
"We're in the midst of this earnings season, so there is
some nervousness about the outlook," said Steve Goldman, market
strategist at Weeden & Co in Greenwich, Connecticut.
"And you still have the financial drag. There's Wachovia,
which is down 10 percent, and the group still is not showing
signs of stabilizing. But oil is helping."
The Dow Jones industrial average <> was down 2.11
points, or 0.02 percent, at 12,323.31. The Standard & Poor's
500 Index <.SPX> was down 2.03 points, or 0.15 percent, at
1,330.80. The Nasdaq Composite Index <> was down 2.93
points, or 0.13 percent, at 2,287.31.
Stocks took a sharp tumble on Friday when economic
bellwether General Electric Co <GE.N> reported an unexpected 6
percent drop in earnings. That raised concerns more companies
could miss earnings estimates.
By early afternoon Monday, Wachovia's stock was down 9.9
percent to $25.06 and was the heaviest weight on the S&P.
Three other Dow components in the banking sector also
declined, with shares of Bank of America <BAC.N> down 3 percent
at $35.84, Citigroup <C.N> down 4.1 percent at $22.41 and
JPMorgan Chase & Co <JPM.N> down 1.7 percent at $41.81.
Citigroup and Bank of America contributed the biggest drag on
the Dow.
Among oil companies, shares of Devon Energy <DVN.N> gained
2.7 percent to $112.09 and Transocean Inc <RIG.N> shares rose
4.2 percent to $151.42..
Exxon Mobil <XOM.N> shares advanced 0.9 percent to $89.41
and ranked second among the stocks buoying the Dow average.
U.S. crude oil futures <CLc1> were up 50 cents at $110.64 a
barrel on the New York Mercantile Exchange.
Movie rental chain Blockbuster Inc <BBI.N> said on Monday
that it had offered to buy struggling electronics retailer
Circuit City Stores Inc <CC.N>. []. Circuit City
shares surged 30 percent at $5.07, while Blockbuster shares
slid almost 16 percent to $2.62 as some investors showed
skepticism about the combination.
In other earnings news, building maintenance supply company
W.W. Grainger Inc <GWW.N> posted a 12 percent rise in
first-quarter profit, beating analysts' forecasts. Its stock
rose 3.2 percent to $82.58.
(Editing by Kenneth Barry)
