Stocks trim losses, but growth worries remain

Stocks recovered some morning losses Monday but remained down after a worse-than-expected retail sales report stoked concerns about a stalling economy.

The Dow Jones Industrial Average ($INDU) was down 64 points at 12,713. The S&P 500 ($INX) was down 5 points at 1,351. The Nasdaq Composite ($COMPX) was down 14 points to 2,994.

The report marks "a meaningful downshift in household spending momentum after the buoyancy seen in the past two years," said Millan Mulraine, a senior U.S. strategist at TD Securities. "The general tone of this report was disappointing, and it suggests that consumers are beginning to retrench spending in a meaningful way."

Excluding the more volatile auto sales component, retail sales fell 0.4%, compared with the flat figure that economists were expecting and after falling 0.4% in May.

At the same time, the New York Federal Reserve reported a read of 7.39 for the July Empire State Manufacturing Survey, up from 2.29 previously and better than the expected 4.

The Commerce Department reported that business inventories rose in May as auto dealers restocked to meet demand, according to Reuters. Inventories increased by 0.3% to $1.58 trillion after rising by a downwardly revised 0.3% in April. Economists had expected inventories to rise by 0.2%. Retail inventories outside of autos were up 0.6%, Reuters said.

Stocks soared Friday, snapping a long losing streak, as investors cheered in-line China gross domestic product data, a mild read on domestic inflation and a better-than-expected​ earnings report from JPMorgan Chase (JPM).

In corporate news Monday, Citigroup (C) reported second-quarter earnings of $2.95 billion, or 95 cents a share, on revenue of $18.64 billion. The average analyst estimate was for a profit of 89 cents a share on revenue of $18.76 billion. Excluding one-time items, the bank earned $3.08 billion, or $1 per share, in the latest quarter. Also, news surfaced over the weekend that Citigroup reportedly plans to seek permission to increase its dividend by the end of this year. The bank has had a minimal penny-per-share quarterly payout since the financial crisis.

Shares of Par Pharmaceutical (PRX) soared early Monday after the company agreed to be acquired by buyout firm TPG for $1.9 billion. The deal values Par shares at $50 each in cash, a premium of more than 35% to Friday's close at $36.58. Under the terms of the deal, Par, a Woodcliffe, N.J., maker of both generic and proprietary drugs, now enters a go-shop period that allows it to solicit a superior proposal from third parties through Aug. 24. If another offer doesn't materialize, the transaction is expected to close in 2012, subject to customary approvals and closing conditions.

Credit card companies MasterCard (MA) and Visa (V) announced an agreement late Friday to settle class-action litigation with U.S. retailers. Visa said it's paying $4.4 billion, while MasterCard said its share of the cash portion of the settlement is $790 million. Visa expects to record a $4.1 billion charge in the June-ended quarter in relation to the settlement. The agreement settles claims by retailers that credit card companies conspired to fix the fees they charge retailers and opens the door for retailers to begin charging consumers extra to use credit cards.

Chip-maker Texas Instruments (TXN) was downgraded to "underperform" from "market perform" at FBR Capital Markets as part of a larger call on semiconductor makers ahead of the second-quarter reporting season. The firm, which also dropped its 12-month price target to $24.50 from $30, said it sees "more downside risks" for Texas Instruments than for other chip stocks "trading near trough valuations."

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