US stocks slipped on Tuesday after a sales warning from discount chain Target Corp dimmed hopes for a strong holiday sales season, pushing the retail sector lower.
Target shares dropped 7.1 percent to $54.30, a day after it said November sales at stores open at least a year would be below its forecast of a 4 percent to 6 percent gain.
Rival Wal-Mart Stores Inc fell 1.1 percent to $48.78 and dragged on the Dow. Shares of Home Depot Inc, another Dow component, shed 0.4 percent to $42.40, in spite of the company reporting a profit that beat estimates.
Target's warning pushed the Standard & Poor's retail index down 2.3 percent, the steepest drop in about three weeks, even after the government reported a gain in October retail sales, excluding autos.
The Dow Jones industrial average was down 10.73 points, or 0.10 percent, to end at 10,686.44. The Standard & Poor's 500 Index was down 4.75 points, or 0.39 percent, at 1,229.01. The technology-laced Nasdaq Composite Index was down 14.21 points, or 0.65 percent, at 2,186.74.
Among the factors limiting the stock indexes' declines, though, was a government report showing a surprising drop in October core producer prices, excluding food and energy.
Investors also got some reassurance from Federal Reserve Chairman nominee Ben Bernanke, who told the Senate Banking Committee that he would, if confirmed, closely monitor inflation, just as Fed chief Alan Greenspan has done.
Retailers dragging down the Nasdaq included Bed Bath & Beyond Inc, down 1.5 percent, or 64 cents, at $41.41, and warehouse club Costco Wholesale Corp, down 1.1 percent, or 55 cents, at $49.25. Dollar Tree Stores lost 2.8 percent, or 67 cents, to $23.66.
Shares of Electronic Arts Inc, the world's largest video game publisher, lost 1.8 percent, or $1.07, to $58.02. SanDisk Corp, a maker of flash memory chips for mobile phones and digital cameras, dropped 7.1 percent, or $4.35, to $57 after Deutsche Bank cut its rating on the stock to "sell."
The Nasdaq's sharper decline compared with blue chips is in part due to investors' view that the business cycle will favour large-capitalisation stocks versus mid- and small-caps, said Tim Woolston, senior vice president at Boston Advisors Inc.
The biggest negative pull on the Dow was General Motors Corp, down 4.8 percent, or $1.13, to $22.61. The shares of GM, the world's largest automaker, have declined for two days since the company initiated a sale that will let anyone in the United States buy vehicles at the same price that employees of GM's parts suppliers pay. But that was offset by blue chip Johnson & Johnson, which helped curb the Dow's decline after it said it had renegotiated a lower acquisition price for medical device maker Guidant Corp.
J&J said it will pay about 15 percent less for device maker Guidant, down from an earlier bid of $25.4 billion. J&J shares gained 3.8 percent, or $2.32, to $62.83, while Guidant shares jumped 8.2 percent, or $4.75, to $62.50.
Trading was heavy on the NYSE, with about 1.69 billion shares changing hands, above last year's daily average of 1.46 billion, while on Nasdaq, about 1.72 billion shares traded, below last year's daily average of 1.81 billion.
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