Stocks fell again today as concerns about violence in Iraq spread throughout the market. Kurdish rebels gained control of the oil-rich city of Kirkuk, and Sunni militants threatened to push into Southern Iraq. In a press conference, President Obama said the use of force remained an option to prevent a potential breakup of the country that U.S. troops exited in 2011, causing jitters among investors. Stocks slid during the course of the session with the Dow Jones Industrial Average (^DJI -0.98%) finishing down 110 points, or 0.7%, while the S&P 500 dropped 0.7%, and the Nasdaq fell 0.8%. Crude oil prices also jumped 2.4% on the events in Iraq, to nearly $107/barrel.
The day's economic reports were also mostly disappointing as retail sales improved just 0.3% in May, below expectations of 0.7%, and down from April's figure at 0.5%, which was revised up from 0.1%, making May's miss less meaningful. Retail sales are a closely watched economic indicator as consumer spending drives 70% of the country's GDP. Initial unemployment claims also increased slightly, from 313,000 to 317,000, essentially in line with expectations at 315,000. The figure remains low enough to indicate that the labor market is improving, but continuing unemployment claims also rose for the first time in several weeks, though just by 11,000, to 2.614 million.
lululemon atheltica (LULU -1.26%) shares tumbled again today, finishing down 16% after the yoga retailer cut its forecast in its quarterly report this morning. The weak guidance was just the latest bit of bad news for the once high-flying Canadian company, which has seen shares fall by more than 50% since last summer, and hit a three-year low on today's news. After a 2013 that featured a massive product recall, the surprise resignation of its CEO, and embarrassing remarks by its founder, the company said today that same-store sales fell for the second quarter in a row. They also forecast a decline in full-year adjusted EPS at $1.71-$1.76 against the analyst consensus at $1.89. The earnings report comes amid more management concerns as founder Chip Wilson said yesterday that he voted against the company's Chairman and one of its directors in board elections, and CFO John Currie said today that he would retire at the end of the year. Wilson's announcement, in particular, seems to indicate that lululemon is still well off track, following last year's problems.
Meanwhile, Twitter (TWTR) shares were moving higher on a management change of its own. The social network finished up 3.5% as COO Ali Rowghani resigned. Rowghani will not be replaced because CEO Dick Costolo would like more direct contact with the company's engineering and product teams, as Rowghani's departure seems to have resulted from a dispute between the two executives. The announcement comes as Twitter shares have fallen due to concerns about sluggish user growth, which was one of Rowghani's principal responsibilities. With the departure of Rowghani, investors seem to believe the company will be implementing a new strategy to lure additional users. Even if, after its recent slide, Twitter still carries a sky-high valuation, Wall Street has made it clear that the company needs to grow its user base rapidly in order to justify its current stock price.
