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Stocks Stumble Despite Rising Retail Sales,Tame Inflation

This article is more than 10 years old.

Stocks failed to stage a strong rebound this morning, even after upbeat readings on U.S. spending and inflation.

The Dow Jones Industrial Average fell 0.1% to 12,680.12. The Nasdaq composite gained about 0.1% to 2,906.06. The S&P 500 was little changed.

Equities have been mired in a weeks-long slump, and just yesterday, the blue-chip index slide another 1%.

Technology stocks were among the best performers this morning. Microsoft shares rose 0.4% to $30.63. Amazon.com gained 2.3% to $228.13.

Avon Products plunged 14% to $18.02 after Coty Inc. pulled its takeover offer.

Home Depot shares dropped 3.9% to $47.99 after it Wall Street's revenue expectations. Home Depot's miss also brought down its chief competitor, Lowe's, which fell 2.6% to $28.78. Saks lost 3.5 to $9.70 after it also missed revenue forecasts.

This tough atmosphere for home improvement and clothing retailers was also evident in the reading on last month's retail sales. April's retail sales edged up 0.1%, restrained by falling sales in building materials and clothing, the Commerce Department said this morning. The rise in retail sales met economists' expectations.

"The slowing in growth in retail sales was expected. Sales earlier in 2012 received a boost from warm winter weather and the early Easter," says PNC's Chief Economist Stuart Hoffman. "It is notable that the big drops  in sales in April were in two components that are especially weather sensitive: building materials and clothing and accessories."

Economists pay close attention to the monthly retail reports, hoping to assess the state of the American consumer. The readings offer small snapshots of how U.S. consumer spending is holding up. As the largest driver of the economy, observers pay close attention to how much spending.

Separate data showed inflation remained tame last month. U.S. consumer prices were virtually flat last month as cheaper gas offset increases in food, clothing and housing.

The Consumer Price Index was unchanged in April, after a 0.3% gain in March. Excluding the volatile food and gas prices, the so-called core index rose 0.2%, the same increase as March.

Consumer prices have risen 2.3% from a year ago, the smallest year-over-year increase since 2011.

"We view this report as consistent with our view that core inflation will remain firm, led by solid gains in shelter costs, even as energy price declines weigh on headline inflation," says Barcalys economist Dean Maki.

Reach Abram Brown at abrown@forbes.com. Or follow @abebrown716.