Stocks fall on Europe concern; retail sales drop

Concerns of a slowing economy in the United States and abroad sent stock prices lower on Wednesday.

The Dow Jones Industrial Average, up 162 points on Tuesday, finished with a loss of 77.42 points at 12,496.38. The Nasdaq Composite index fell 24.46 points to 2,818.61, and the S&P 500 Stock Index dropped 9.30 points to 1,314.88.

Two economic reports showed the impact of lower energy costs. The producer price index, which measures inflation at the wholesale level, fell 1 percent in May, and retail sales were down 0.2 percent in the same period.

Oil prices fell 70 cents to $82.62 a barrel, and the markets reacted to evidence of a drop in demand for crude. OPEC ministers are meeting to discuss production levels and oil prices. Gold was up $5.60 to $1,619.40 an ounce, rising for the fourth consecutive session.

Nine out of 10 groups in the Standard & Poor’s 500 Index retreated as consumer discretionary, commodity and industrial shares had the biggest losses. Home Depot Inc. (NYSE: HD), Caterpillar Inc. (NYSE: CAT) and DuPont Co. (NYSE: DD) dropped at least 1.5 percent. Dell Inc. (Nasdaq: DELL) advanced 2.6 percent after saying it will pay a dividend.

“It’s a tough recipe,” said Burt White, who oversees $390 billion as chief investment officer at LPL Financial Corp. in Boston. “Consumers are starting to question the validity of this recovery and beginning to plan for tougher times. At the same time you have global austerity. You’re getting more recessionary pressures throughout Europe, and borrowing costs are moving higher. Things are deteriorating.”

Retail sales dropped in May for a second month as limited job and income gains held back consumers. Euro-area industrial production declined for a second month in April, led by a drop in Germany, adding to signs of a deepening economic slump. The Group of 20 nations meeting in Mexico next week probably won’t announce significant progress on Europe’s debt crisis, a U.S. official said.

The S&P 500 briefly rose as banks rallied. JPMorgan Chase & Co. (NYSE: JPM) jumped 1.6 percent to $34.30 as Chief Executive Officer Jamie Dimon testified about his bank’s $2 billion trading loss. He said a switch to a new risk model in the first quarter may have helped fuel the loss, and the bank has shifted back to the old system.

“Dimon is not putting his foot in his mouth,” said Rick Fier, director of equity trading at Conifer Securities LLC in New York. His firm oversees more than $12 billion. “The bid in JPMorgan Wednesday is more because he didn’t say anything to get him into any more trouble. Still, we’re not really seeing people chase this market. What managers are talking about the most is: Where’s the growth going to come from?”

Progressive Corp. (NYSE: PGR) slumped 4.4 percent to $20.74. The fourth-largest U.S. auto insurer fell as claims costs rose above the company’s target.

Global Payments Inc. (NYSE: GPN) retreated 4.1 percent to $40.48. The bank-card processor disclosed that “intruders” may have hacked into company servers containing personal information.

Casey’s General Stores Inc. (Nasdaq: CASY) tumbled 13 percent, the most since 2008, to $52.18. The operator of convenience stores in the U.S. Midwest reported fourth-quarter earnings that trailed analysts’ estimates, citing a decline in gasoline profits.

Johnson & Johnson (NYSE: JNJ) gained 2.2 percent to $64.45. The company said its $19.7 billion purchase of Synthes Inc., the largest acquisition in its 126-year history, will add 3 cents to 5 cents a share to 2012 earnings as it gained U.S. clearance for the deal. Separately, the shares were upgraded at Jefferies Group Inc. (NYSE: JEF) and Raymond James Financial Inc. (NYSE: RJF).

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