New York - A surprise decline in June retail sales was the latest worrying sign from the economy, pushing stocks slightly lower on Monday, but Citigroup's earnings limited losses.
The S&P 500 has fallen in seven of the past eight sessions, pressured by concerns about economic growth. Still, in a sign of resilience, the index is up roughly 7% from a low hit early in June despite the worsening economic data.
Trading volume at 5.06 billion shares on the NYSE, Amex and Nasdaq was the second lightest day this year, according to preliminary data from Reuters.
The drop in retail sales in June, the third consecutive monthly decline, contrasted with economists' expectations for a small increase and was the latest sign the recovery is flagging.
Citigroup's earnings, which exceeded estimates, followed JPMorgan Chase's forecast-beating earnings on Friday, which sparked a rally and broke a six-day streak of losses by the Dow industrials.
Shares of Citigroup gained around 0.6% to $26.81. Although the third largest US bank by assets reported stronger-than-expected earnings, its profit fell 12% due to losses from credit crisis-era assets.
Giri Cherukuri, head trader at OakBrook Investments, which oversees $1.3bn in Lisle, Illinois, said there was a tug-of-war between better-than-expected earnings in the financial sector and worries about the economy.
"The next week or so the market will be driven more by earnings than economic numbers," he said, noting that recent cautious outlooks from US corporations could translate into disappointing earnings as reporting season unfolds.
Many companies have warned on profits in recent weeks. Negative to positive earnings guidance for the second quarter is 3.3 to 1, the worst since 2008, Thomson Reuters data showed.
The Dow Jones industrial average dropped 49.88 points, to 12,727.21. The Standard & Poor's 500 Index fell 3.14 points, to 1,353.64. The Nasdaq Composite Index lost 11.53 points, to 2,896.94.
"Three months in a row of lower retail sales is pretty concerning. People are going to have to lower their GDP estimates," said Paul Zemsky, head of asset allocation at ING Investment Management in New York. "Given that, I'm surprised the market is holding so well."
Zemsky said expectations that earnings turn out better than feared could be one reason. Record low US Treasury bond yields and expectations that the Federal Reserve could support the economy have also helped prop up stocks.
The IMF shaved its 2013 forecast for global growth to 3.9% from the 4.1% it projected in April, trimming projections for most advanced and emerging economies. It left its 2012 forecast unchanged at 3.5%.
The World Trade Organisation ruled in favor of the United States, finding that China discriminates against foreign bank cards. The decision could help US credit card companies like Visa, Mastercard and American Express.
In another credit card development, Visa and MasterCard and banks reached a $7.25bn settlement with US retailers in a lawsuit late on Friday.
Visa rose 2.5% to $127.15 and MasterCard shares gained 1.7% to $436.89. American Express shares rose 1.2% to $58.64.
In mergers and acquisitions news, GlaxoSmithKline is to acquire its long-time partner Human Genome Sciences for $3bn, ending a three-month hostile pursuit of the US biotech company on friendly terms after sweetening its offer. Shares of Human Genome rose 4.5% to $14.19.
In another healthcare deal, private equity firm TPG said it would buy US-based Par Pharmaceutical for $1.9bn, sending Par shares up 36.7% to $50.