The European debt crisis reared its ugly head after one of Portugal’s biggest banks delayed a debt payment. European stocks plummeted, putting pressure on U.S. markets in early trading, but by the close they had recovered more than half those losses.
Some more encouraging news on the labor front did little to help matters. The Labor Department reported that the number of people filing for jobless benefits last week fell to near a seven-year low.
Earnings also failed to impress. Family Dollar (FDO) shares lost 12 cents to close at $64.12 after the discount retailer, under pressure from activist investor Carl Icahn to sell itself, reported its third straight quarterly decline in same-store sales. Profits also missed estimates. The company plans to close 370 under-performing stores by the end of this year and said it will start selling wine and beer in the coming years in an effort to lure shoppers.
Potbelly (PBPB) shares lost more than a quarter of their value, dropping $3.68 to close at $10.97. The sandwich shop chain cut its earnings outlook for the year and forecast that second quarter sales will be weaker-than-expected.
Investors were also yelling timber after flooring retailer Lumber Liquidators (LL) cut is earning outlook for the year because of significantly weaker-than-expected customer traffic. Shares of Lumber Liquidators plummeted 22% to end the session at $55.25. The news triggered selling in other home-improvement retailers. Home Depot (HD) fell $1.33 to $79.40, Lowe’s (LOW) lost 66 cents to end at $47.20 and Ethan Allen Interiors (ETH) fell 85 cents to $23.62.
One retailer, however, managed to escape the so-called “retail funk." Zumiez (ZUMZ) gained more than 6%, or $1.78, to close at $29.78 after the company raised its sales outlook for the second quarter after better-than-expected same-store sales in June.
Wells Fargo (WFC) is scheduled to report results before the opening bell tomorrow.