Retail stocks dropped 1.9 percent in early trading today as investors responded to lackluster second-quarter earnings reports and rising in first-time claims for unemployment insurance.

The S&P Retail Index fell 8.05 points to 406.25 and the Dow Jones Industrial Average retreated 1.7 percent, or 179.94 points, to 10,235.60. Retail decliners included Sears Holding Corp., down 7.7 percent to $62.06, and The Bon-Ton Stores Inc., off 6.9 percent to $7.80. Both companies posted second-quarter losses before the market opened.

Cash-strained American Apparel Inc. continued its decline, falling 6 cents to 75 cents a share.

Last week, a seasonally adjusted 500,000 people submitted initial jobless claims, an increase of 12,000. Economists were expecting claims to fall by 12,000 to a total of 476,000. Investors have been closely watching the job market for signs of an uptick, which would help generate consumer spending.

Asian investors were more bullish, driving the Nikkei 225 up 1.3 percent in Tokyo and the Hang Seng Index ahead 0.2 percent in Hong Kong. But European investors pushed the CAC 40 down 2.1 percent in Paris, the DAX down 1.8 percent in Frankfurt and the FTSE 100 down 1.7 percent in London.

For complete coverage, see Friday’s issue of WWD.

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