Wall Street declines

The Associated Press

NEW YORK — Wall Street pulled back Tuesday after a report on retail sales and comments from Federal Reserve Chairman Ben Bernanke gave investors little incentive to extend the previous session’s big advance.

Investors remained concerned that higher energy and food prices will curb consumer spending, which makes up more than two-thirds of the U.S. economy. The latest report from the Commerce Department showed that retail sales fell in April, increasing worries about a recession. The report, which was in line with economists’ expectations, did show better-than-expected sales if automobiles are excluded. However, that indicates Americans are reluctant to make big-ticket purchases — especially as soaring gasoline prices cut into demand.

Meanwhile, Bernanke said during a speech at the Atlanta Fed’s Financial Markets Conference that turmoil in financial markets has eased somewhat, but the situation is still "far from normal.” He noted some improvements in the markets for certain mortgage-backed securities, such as those backed by Fannie Mae and Freddie Mac, as well as some fixed-rate mortgages and corporate debt.

In midmorning trading, the Dow Jones industrial average fell 45.02, or 0.35 percent, to 12,831.29. The blue chip index soared 130 points on Monday as oil prices fell back and alleviated some concern about accelerating inflation.

Broader indexes were also lower. The Standard & Poor’s 500 index fell 2.90, or 0.21 percent, to 1,400.68. And, the Nasdaq composite index declined 6.10, or 0.25 percent, to 2,482.39.

Bonds fell in early trading. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.86 percent from 3.80 percent late Monday.

Oil prices edged up after falling briefly below $124 a barrel on profit-taking after it hit a record in the previous session. Light, sweet crude 11 cents to $124.34 a barrel on the New York Mercantile Exchange.

In corporate news, investors pored over a number of high-profile acquisitions, including Hewlett-Packard Co.’s offer to buy Electronic Data Systems Corp. for $12.6 billion. In addition, Staples Inc. raised its hostile bid to acquire Dutch rival Corporate Express NL.

The deal to combine Hewlett-Packard with EDS will create the second-largest technology services provider behind International Business Machines Corp. EDS shares rose 35 cents to $24.43, while Hewlett-Packard fell $2.44, or 5.2 percent, to $44.39.

Staples rose 39 cents to $22.35 after the office supply retailer sweetened its offer price by 10 percent. Corporate Express said it is willing to consider the deal.

Investors got another read on the consumer after Wal-Mart Stores Inc. reported first-quarter profit above Wall Street forecasts. However, the world’s largest retailer, often a barometer of consumer spending in the U.S., forecast that the current quarter will come in below expectations.

Wal-Mart fell $1.05 to $56.97.

Luxury home builder Toll Brothers Inc. said preliminary results show homebuilding revenue fell 30 percent in its fiscal second quarter amid a weak spring selling season. The company also expects to continue to face "challenging times” ahead, given soft conditions in most markets. Shares edged up 6 cents to $23.43.

Overseas, Japan’s Nikkei stock average fell 1.53 percent. In morning trading, Britain’s FTSE 100 was down 0.04 percent, Germany’s DAX index fell 0.47 percent, and France’s CAC-40 shed 0.64 percent.

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