NEW YORK — Wall Street began a holiday-shortened week with a moderate pullback Monday as investors recoiled at bleak news from Toyota Motor Corp. and drugstore operator Walgreen Co.
The two companies — both viewed as better positioned than many of their peers — provided more evidence that even stronger companies are struggling as consumers cut back their spending.
Walgreen’s profit fell 10 percent in its fiscal first quarter, mostly because of the costs of opening more than 200 new stores, so the company said it will slow its expansion. Toyota, meanwhile, slashed its earnings forecast for a second time, warning that it now expects to post an operating loss for the fiscal year through March.
Monday’s gloomy corporate news highlighted how weak the consumer is, said Kim Caughey, equity-research analyst at Fort Pitt Capital Group.
That’s a troubling prospect, she said, because it appears the U.S. economy cannot rely on consumer spending to pull it out of its downturn.
“Even though mortgage rates are coming down, we don’t see the consumer running out and buying that house,” Caughey said.
Analysts pointed out, though, that trading volumes were very low Monday and are likely to stay that way throughout the week. So trading was choppy — the Dow fell by as many as 207 points before paring its losses — and the market’s movements may not be indicative of its long- term direction.
“A truncated week is going to make it tough to generate any firm takeaways from trading,” said Craig Peckham, equity-trading strategist at Jefferies & Co. “I would expect to see sleepy volumes and a lot of people protecting positions going into year-end.”
The Dow fell 59.34, or 0.69 percent, to 8,519.77, after briefly moving into positive territory early in the session, tumbling and then recovering some of its losses. Monday’s retreat was the fourth straight daily loss for the Dow.
Broader stock indicators also finished lower. The Standard & Poor’s 500 index fell 16.25, or 1.83 percent, to 871.63, and the Nasdaq composite index fell 31.97, or 2.04 percent, to 1,532.35.
