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Stocks mixed after disappointing retail sales data

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By Stephen Bernard

NEW YORK (AP) — Stocks mostly fell Wednesday after a disappointing retail sales report chilled optimism from Intel's strong earnings and outlook.

The Dow Jones industrial average fell 15 points, putting its six-day winning streak in jeopardy. But the tech-heavy Nasdaq composite rose thanks to chipmaker Intel Corp.'s results.

Shoppers cut back on spending for the second straight month. The Commerce Department said June retail sales fell 0.5 percent. That's worse than the 0.2 percent decline forecast by economists polled by Thomson Reuters. However, excluding autos, sales were down 0.1 percent, in line with expectations.

Shares of retails, including J.C. Penney Co., Macy's Inc. and Target Corp., all fell after the monthly sales report.

Retail sales are critical to the economic recovery because shoppers account for about 70 percent of the nation's economic activity. High unemployment has kept customers out of stores and could hold retailers' earnings in check.

The weak sales report added to the mixed signals on the pace of a recovery. Economic reports have largely showed a rebound is slowing, but recent earnings have largely topped expectations. And companies have been optimistic in their outlooks for growth during the second half of the year.

"We have a lot of conflicting news here," said Bob Enck, president and CEO of Equinox Fund Management in Denver. Until economic and earnings reports more closely align, the market is likely to remain choppy and volatile, Enck said.

Intel reported its biggest quarterly profit in a decade as large corporations started buying new computers for employees. Companies have been reluctant to upgrade technology during the downturn, so a return of spending could be a sign corporations are ready to start expanding their businesses again and hire new workers.

Intel's profit and outlook, which surpassed analysts' forecasts, are considered good signs for the economy because the chipmaker manufactures 80 percent of the processors that run PCs and has a large global reach.

In morning trading, the Dow fell 15.22, or 0.2 percent, to 10,347.24. The Standard & Poor's 500 index fell 3.63, or 0.3 percent, to 1,091.71, while the Nasdaq rose 5.04, or 0.2 percent, to 2,247.07.

Intel shares rose $1.08, or 5.1 percent, to $22.09. J.C. Penney fell 43 cents to $22.76, while Macy's drooped 32 cents to $18.15. Target fell 73 cents to $49.16.

About three stocks for every one that rose on the New York Stock Exchange. Volume came to 87.6 million shares, compared with 90.4 million shares traded at the same time Tuesday.

A drop in the Dow on Wednesday would snap a six-session winning streak that has pushed the index up 7 percent, its best stretch since last July. The recent run-up has erased nearly all the Dow's losses for the year.

The Dow rose 147 points Tuesday after aluminum producer Alcoa and railroad company CSX both reported better-than-expected profit. The pair also provided optimistic outlooks for the rest of the year.

Stocks were in a slump in May and June as economic reports showed the recovery wasn't proceeding as fast as hoped. Rising debt problems in some European countries also added to the markets' turbulence.

However, early earnings reports have shown that slow economic growth is not hurting corporate profits. Investors' concerns about a further slowdown later in the year have not been shared by companies, which have largely provided upbeat outlooks for future quarters.

Meanwhile, bond prices rose Wednesday as investors were again uneasy about stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.08 percent from 3.13 percent late Tuesday.