Expectations of a firm start got the kibosh as better than expected retail sales or July raised the prospect of an early interest rate rise.
Until the retail sales figures came out, the expectation had been that shares would advance as fears of a further devaluation of the Chinese yuan receded.
The S&P 500 index was off seven points in the first hour at 2,080 while the Dow Jones industrial average was nursing a 49 point loss on 17,352. The Nasdaq Composite made a slightly better first of things, shedding 10 points at 5,035.
The “good news is bad news” paradigm is alive and well, with July’s 0.6% rise in retail sales – a shade better than the 0.5% economists had been expecting – suggesting to some that the US economy may be healthy enough to withstand an interest rate rise sooner rather than later.
Excluding car sales, retail sales rose 0.4%, in line with economists’ expectations.
The growth comes as a relief after June’s 0.1% decline.
Ironically, a retailer is leading the decline. Department store Kohl’s (NYSE:KSS) was the biggest blue-chip faller at the start of market trading, shedding more than 10%.
In the quarter ended 1 August, Kohl’s reported a profit of US$130mln, worth 66 cents a share, down from US$232mln (US$1.13) a year earlier.
Chief executive Kevin Mansell attributed an underwhelming sales performance to the shift in sales in tax-free states from July into August.
The market liked the update from network equipment maker Cisco (NASDAQ:CSCO), released after the bell yesterday.
Net income rose to US$2.3 billion, or US$0.45 per diluted share, in the three months ended July 25, from US$2.2 billion, or US$0.43 per diluted share, a year earlier.
Adjusted earnings were US$0.59 per share, surpassing the US$0.56 average estimate of 34 analysts surveyed by Capital IQ.
Fourth-quarter revenue increased 4% to US$12.8 billion year-over-year. That result exceeded the Wall Street consensus of US$12.7 billion.
Shares of Tesla Motors (NASDAQ:TSLA) opened 1.5% higher this morning as the electric car specialist announced it would be turning to the market to finance its rapid pace development.
The California based company said it would sell US$500 million new common shares.
Tesla’s chief executive officer (CEO), Elon Musk, himself said he intends to buy US$20 million of the new shares issued in connection with this offer. In detail, 2.1 million shares will be issued at the previous day’s closing price of US$238.17.