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NEW YORK, Aug 13, 2008 (AFP) - US stocks tumbled Wednesday following market declines a day earlier as a government report revealed a mild contraction in July retail sales suggesting American consumers have cut their spending.
The retail sales report is tracked closely by the markets because of its close ties to consumer spending which makes up some two-thirds of overall US economic growth.
The Dow Jones Industrial Average was down 73.11 points (0.63 percent) at 11,569.36 at XXXX GMT.
The tech-heavy Nasdaq composite had dipped a lesser 1.31 points (0.05 percent) to 2,429.30 while the broad-market Standard & Poor's 500 index was down 4.50 points (0.35 percent) at 1,285.09.
The monthly retail sales snapshot showed sales contracted 0.1 percent last month, largely in the face of slumping car and truck sales.
"The July numbers were essentially in line with estimates, so the initial reaction to them was understandably muted. The report overall, though, is on the soft side," said Patrick O'Hare, an analyst at Briefing.com.
Sales were dragged down by falling demand for gasoline-guzzling trucks and cars, as large auto makers continue to battle high fuel prices.
Economists said the report would further pressure the Federal Reserve to keep US interest rates suppressed, after the central bank opted to keep its key rate unchanged at 2.0 percent earlier this month.
Auto stocks were generally weaker in the wake of the report's release. General Motors's stock was down 2.3 percent at 10.84 dollars while Ford was 3.5 percent lower at 5.01 dollars.
The retail report was also released as retail giant Macy's announced that its same-store sales across the country had dropped 2.1 during the second quarter.
Traders said they were also keeping a close eye on financial stocks and oil prices amid lingering jitters about banking sector losses and the direction of the oil market.
A benchmark New York oil futures contract was up 1.96 dollars at 113.10 dollars a barrel after falling in recent sessions.
The sharp drop in oil prices from record peaks over 147 dollars last month has raised hopes that the inflationary pressures buffeting the economy may be easing.
Bond prices rose as the yield on the 10-year US Treasury bond fell to 3.901 percent from 3.918 percent Tuesday, while that on the 30-year bond declined to 4.537 percent from 4.552 percent.
Bond yields and prices move in opposite directions.
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