U.S. stocks on Thursday scaled back early losses as Sears Holdings Corp.'s forecast helped lift the Nasdaq Composite and offset disappointment that came after Wal-Mart Stores Inc. cut its earnings expectations.
Sears , the operator of Kmart and Sears, forecast quarterly profit above Wall Street expectations, with its shares climbing 17%.
"In contrast to Wal-Mart, the retailer [Sears] posted better-than-expected December sales figures and also guided fourth quarter earnings estimates higher," said Frederick Ruffy, options strategist at WhatsTrading.com.
"Wal-Mart had been the stand-alone shining star, one of the two stocks up on the Dow [Jones Industrial Average] last year," said Art Hogan, chief market strategist at Jefferies & Co.
"Unfortunately, like the rest of retail, it's falling into the category of being hurt by lower consumer spending. Any way you slice it, Wal-Mart is going to be a big disappointment."
Bouncing back a bit from an earlier triple-digit decline, the Dow Jones Industrial Average was more recently off 46.19 points at 8,723.51.
Fifteen of the blue-chip index's 30 components posted early losses, with Wal-Mart the greatest laggard, off 7.2%. The world's largest retailer posted lower-than-expected December sales and cut its fourth-quarter forecast. Read the full report on Wal-Mart.
A slew of other retailers -- including Gap Inc. , Macy's Inc. and Limited Brands Inc. -- cut their profit outlooks. Read the retail roundup.
The S&P 500 fell fractionally to 906.10, with consumer discretionary, information technology and consumer staples fronting sector declines.
Telecommunication services, financials and materials fared the best among the S&P's 10 industry groups.
Turning positive, the Nasdaq Composite was lately up 4.76 points at 1,603.82.
Game Stop Corp. also offered a bright spot in a largely dismal holiday season, with shares of the video-game retailer climbing nearly 11% after it reported a 10% rise in same-store sales during the 2008 holiday season. Read detailed report.
Volume on the New York Stock Exchange neared 258 million, and decliners outpaced advancers 4 to 3. On the Nasdaq, 189 million shares traded, and advancers edged only slightly ahead of decliners.
On the New York Mercantile Exchange, crude futures fell for a third straight session amid worries the deepening economic troubles in the world's biggest oil-consuming country would further cut energy demand. See Futures Movers.
Better-than-anticipated weekly jobless claims data did little to overshadow the disappointing retail results, and they did not alter gloomy forecasts for Friday's unemployment report.
The government early Thursday reported a drop in weekly jobless claims, but analysts said the decline was likely due to technical glitches that come with seasonally adjusting the numbers around the holidays. Read Economic Report.
"The unemployment rate and change in nonfarm payroll numbers are expected to be bad. The issue is the magnitude," said Hogan.
Three-month dollar LIBOR continued to slide, falling to 1.35% from 1.4%.
Overnight in Asia, technology, energy and financial shares led regional markets lower, with the Hang Seng losing 3.8% and the Nikkei 225 slumping 3.9%.
In Europe, London's FTSE 100 index lost 1.7%, and the German DAX 30 fell 1.7% in early afternoon trading, with big losses seen for the metals sector.
U.S. stocks dropped Wednesday after job-cut and profit warnings from heavyweights like Alcoa Inc. and Intel Corp. combined with a report from payrolls processor ADP estimating nearly 700,000 private-sector jobs were lost last month. The Dow Jones Industrial Average dropped 245 points, the Nasdaq Composite lost 53 points, and the S&P 500 dropped 28 points.
