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NEW YORK -- U.S. stocks are mostly lower Thursday afternoon as a four-day rally in global markets fades. U.S. and Chinese officials wrapped trade talks in Beijing without a significant breakthrough. Retailers sank after Macy's said its sales over the holidays were worse than expected, and airlines slumped after American gave a disappointing revenue forecast.

KEEPING SCORE: The S&P 500 index lost 3 points, or 0.1 percent, to 2,581 as of 1:30 p.m. Eastern time. The Dow Jones Industrial Average fell 19 points, or 0.1 percent, to 23,859. It fell 175 points Thursday morning before turning higher. The Nasdaq composite edged down 13 points, or 0.2 percent, to 6,943. The Russell 2000 index of smaller-company stocks dipped 1 point, or 0.1 percent, to 1,436.

BLACK EYE-DAY: Macy's said holiday sales slowed in the middle of December and the department store cut its annual profit and sales forecasts. Its stock is on track for its biggest loss of all time as it plunged 18.7 percent to $25.80 in heavy trading. Kohl's sank 6.5 percent to $65.33 after it said sales grew at a slower pace than they did a year ago, and L Brands fell 7 percent to $26.24 after it said Victoria's Secret sales sank over the holidays.

Macy's announcement came as a surprise because investor expectations for the holiday season have been high. Unemployment is the lowest it's been in decades, wages are rising and consumer confidence is high, while gas prices dropped late last year. In late December, stocks rallied after Mastercard SpendingPulse said shoppers spent $850 billion between Nov. 1 and Dec. 24, an increase of 5 percent from the same time a year earlier.

But the stock market fell sharply in October and then took a dramatic plunge over the first three weeks of December. Shortly afterward the federal government went into a partial shutdown that is still ongoing. All of that may have made shoppers less willing to spend.

Gap lost 3.8 percent to $25.06 and Capri Holdings, the parent company of Michael Kors and Versace, skidded 4.1 percent to $40.16. Estee Lauder fell 2.3 percent to $124.91.

THE QUOTE: "High-end consumers, even though they're making decent money (and) the economy is going on relatively strong, it may have affected their willingness to splurge over the holidays," said Ken Perkins, president of the research firm Retail Metrics. "It was not good timing at all."

While retailers took steep losses Thursday, Perkins said the market turmoil is a much bigger problem for companies like Macy's because most stocks are owned by relatively wealthy people. That means big box stores and companies that sell less expensive goods won't be affected as much, as shown by Target's stronger sales report. Perkins added that said Amazon likely had a "stellar" holiday season.

STUCK ON THE RUNWAY: Airlines skidded after American said its fourth-quarter revenue growth at the low end of its projections. Delta gave a similarly disappointing forecast a week ago. American fell 6.1 percent to $31.36 while Delta lost 1.2 percent to $47.90 and United dropped 4.4 percent to $80.09.

FED AGAIN: Federal Reserve Chairman Jerome Powell was interviewed at the Economic Club of Washington DC. Stocks declined slightly after Powell said he expects the Fed's $4 trillion bond portfolio to shrink until it is "substantially smaller than it is now." Powell said the Fed had about $1 trillion on its balance sheet before the 2007-08 financial crisis.

The Fed's bond holdings have been slowly shrinking, which tends to put upward pressure on long-term interest rates. Investors have grown concerned recently about the effects of those tighter credit conditions as the global economy slows. Powell said in December that the Fed could make adjustments to the speed of the changes to its portfolio if necessary.

U.S.-CHINA TALKS: The just-concluded talks in Beijing helped the U.S. market rally for four days in a row, its longest streak since mid-September. But it's not clear what the next steps will be or when they will talk next.

The U.S. Trade Representative said China's delegation pledged to buy more energy and agricultural products and manufactured goods from the U.S. But that's a relatively minor area of disagreement and there were no hints of progress on bigger issues. The U.S. wants China to change its technology policy to reduce cyber theft of trade secrets and seeks more access to the Chinese market and increased protection for foreign patents and copyrights.

BONDS: Bond prices were mixed. The yield on the 2-year Treasury note rose to 2.57 percent form 2.55 percent, while the yield on the longer-term 10-year Treasury note remained at 2.72 percent.

ENERGY: Oil prices dipped after hitting their highest levels in almost a month. U.S. crude fell 0.2 percent to $52.27 a barrel in New York and Brent crude slid 0.5 percent to $61.16 a barrel in London.

OVERSEAS: France's CAC 40 lost 0.2 percent while Germany's DAX edged up 0.3 percent. The British FTSE 100 rose 0.5 percent.

Japan's Nikkei 225 index, which gained more than 1 percent on Wednesday, fell 1.3 percent and the Kospi in South Korea dropped 0.1 percent. Hong Kong's Hang Seng recovered from early losses and added 0.2 percent.

NW News on 01/11/2019

Print Headline: Stocks slip following four-day surge; Macy's nosedives

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