Stocks fall after weak sales report

NEW YORK - A surprisingly weak retail sales report drove stocks lower Tuesday, giving the Dow Jones industrial average its second straight day of losses.

The Commerce Department said Tuesday that retail sales rose 0.3 percent in January, the smallest increase since June and half of what economists had predicted.

Kim Caughey Forrest, equity research analyst at Fort Pitt Capital Group Inc., said higher prices for gasoline and raw materials were beginning to be passed along to consumers. That is hurting retail sales and spending, she said.

"Without wage gains," she said, "people are going to buy less."

Energy companies led the way down. Shares of Exxon Mobil Corp. lost 2.28 percent, the largest drop among the 30 large companies that make up the Dow. Exxon Mobil said it added 3.5 billion barrels of oil and gas last year to its massive reserves, more than twice what Exxon produced in 2010.

The Dow fell 41.55, or 0.34 percent, to close at 12,226.64. The Standard & Poor's 500 index fell 4.31, or 0.32 percent, to 1,328.01. The Nasdaq composite index fell 12.83, or 0.46 percent, to 2,804.35.

The parent of the New York Stock Exchange agreed to combine with the operator of the Frankfurt stock exchange, Deutsche Borse AG, creating the world's largest financial-markets company.

Shares of both companies fell after the deal was announced. NYSE Euronext Inc.'s shares lost 3.37 percent in New York, while Deutsche Borse's shares lost more than 2 percent in Frankfurt.

Shares of Limelight Networks Inc. jumped 26.93 percent after the provider of streaming-video services narrowed its fourth-quarter loss and issued a better-than-expected forecast for the current quarter. The company is benefiting from consumers' turning to the Internet to watch TV and movies; one of its customers is online video company Netflix Inc.