Market Wrap: Blame Ukraine Again as Stocks Dip

Sergei Supinsky/AFP/Getty ImagesUkrainian President Petro Poroshenko

U.S. financial markets ended slightly lower Thursday, marking their first loss in a week of record highs.

The escalating conflict in Ukraine, disappointing retail earnings and profit outlooks combined to weigh down the market, eclipsing some good news on the U.S. economy and labor market.

"The key driver was largely the Ukraine news and the uncertainty of what that means," said Erik Davidson, deputy chief investment officer at Wells Fargo Private Bank.

U.S. stock index futures pointed to a lower opening in premarket trading Thursday, following a downward turn in global stock markets as traders reacted to the developments in Ukraine.

Ukrainian President Petro Poroshenko said Russian forces had entered his country. He called an emergency meeting of the nation's security council. The yield on the 10-year U.S. Treasury note declined as investors sought out lower-risk assets.

A string of disappointing earnings and profit outlooks late Wednesday and early Thursday also weighed on the market early on.

Not all the news was discouraging.

The Commerce Department estimated that the U.S. economy grew at an annual rate of 4.2 percent in the April-June quarter.

The Labor Department added to the good news, saying the number of Americans seeking unemployment benefits slipped last week to 298,000, a low level that signals employers are cutting fewer jobs and hiring is likely to remain strong.

"The economic data in the U.S. continues to look quite good," Davidson said.

Nonetheless, major U.S. stock indexes opened lower. They pared some of their losses as the day went on, but remained down the rest of the day.

All told, the Standard & Poor's 500 index (^GPSC) fell 3.38 points, or 0.2 percent, to 1,996.74. The index hit record highs the first three days of the week. The Dow Jones industrial average (^DJI) slid 42.44 points, or 0.3 percent, to 17,079.57. And the Nasdaq composite (^IXIC) shed 11.93 points, or 0.3 percent, to 4,557.69.

Major U.S. indexes are on track to end higher for the month and are up for the year.

Trading volume was lighter than the recent average ahead of the Labor Day holiday.

Investors seized on the lackluster earnings to reduce their holdings in several retailers.

Williams-Sonoma (WSM) tumbled 12 percent after the cookware and home furnishings company issue a disappointing full-year profit outlook late Wednesday. The stock shed $8.96 to $65.93.

Tilly's (TLYS) lost 4.3 percent after the company forecast a difficult summer, noting customer traffic was down and merchandise discounts were cutting into its profit. The stock slid 37 cents to $8.15.

Genesco (GCO) also declined after the apparel and footwear seller issued a profit outlook that was shy of Wall Street's expectations. Genesco sank $6.73, or 7.6 percent, to $81.94.

Abercrombie & Fitch (ANF) fell 4.8 percent after the teen clothing company reported revenue that fell short of analysts' estimates. The stock slid $2.13 to $41.87.

The poor earnings and outlooks from retailers ran counter to what has otherwise been a strong corporate earnings season, which has helped drive a late-summer revival for U.S. stocks.

The dour outlooks are particularly discouraging when one considers that the sector is entering what traditionally is the best season for retailers, said JJ Kinahan, chief strategist at TD Ameritrade.

"That does put a bit of a note of caution over everything," he said.

Elsewhere in the market, the price of oil rose for the third day in a row on evidence of a stronger U.S. economy. Benchmark U.S. crude rose 67 cents to close at $94.55 a barrel on the New York Mercantile Exchange.

Wholesale gasoline rose 0.7 cent to close at $2.753 a gallon and natural gas rose 4.1 cents to close at $4.044 per 1,000 cubic feet.

Brent crude, a benchmark for international oils used by many U.S. refineries, fell 26 cents to close at $102.46 on the ICE Futures exchange in London.

The yield on the 10-year Treasury note fell to 2.34 percent. In metals trading, gold climbed $7 to $1,290.40 an ounce, silver rose 13 cents to $19.53 an ounce and copper fell 5 cents to $3.13 a pound.

What to Watch Friday:
  • Big Lots (BIG) releases quarterly financial results before U.S. markets open.
  • The Commerce Department releases personal income and spending for July at 8:30 a.m. Eastern time.
  • The Institute For Supply Management-Chicago releases its purchasing managers index for August at 9:45 a.m.
  • The University of Michigan issues its index of consumer sentiment for August at 10:30 a.m.

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Don't blame it on Ukraine. Blame it on Russia for illegally breaching Ukraine's sovereignty, and interfering in their internal affairs.

August 29 2014 at 2:22 AM Report abuse rate up rate down Reply

The media always has to post some simplifying crap to rationalize why the markets go up or down.... Trust is, the markets go up and down for little to no reason at all.

Why don't they post on how much volume there was each day.... That is more informative than any index.

August 29 2014 at 12:46 AM Report abuse -1 rate up rate down Reply

Why is it "Blame Ukraine" in the headline. Try blaming Putin and Russia ... they are the aggressors, not the people of Ukraine. The coverage almost everywhere on this unfolding horror story is appalling. First off, I am flabbergasted how many "journalists" still refer to Ukraine as "The Ukraine" over two decades sine the USSR collapsed. Second, Ukraine is reported on as though it were some dinky little village ... in fact it is by several measures the second largest country in Europe with more warm water ports and international access than almost any other nation there. Ukraine matters.

August 28 2014 at 11:00 PM Report abuse +1 rate up rate down Reply
1 reply to flp3's comment

you will believe anything the media puts in front of your face.

August 29 2014 at 12:45 AM Report abuse rate up rate down Reply

Since when did they care which side was winning unless it cost them?

August 28 2014 at 5:18 PM Report abuse +2 rate up rate down Reply
John Roberson

not much of a drop considering that the authors of the article suggest that WW3 is coming?

August 28 2014 at 5:18 PM Report abuse +1 rate up rate down Reply