Economic fears hit Wall Street

Stocks fall in the early going after key sign of inflation rises, raising worries about economy; retail sales disappoint.

November 2 2006: 9:56 AM EST

NEW YORK (CNNMoney.com) -- Stocks slipped Thursday at the open, as a bigger-than-expected rise in a closely-watched inflation gauge sent stocks and bond prices lower.

The Dow Jones industrial average (down 30.73 to 12,000.29, Charts) and the broader S&P 500 (down 3.40 to 1,364.41, Charts) index both lost around 0.3 percent in the early minutes of the session.
 
The tech-fueled Nasdaq composite (down 8.29 to 2,326.06, Charts) lost 0.5 percent.

Stocks have slipped for two sessions, with investors taking profits on the recent rally in response to a series of weak economic reports.

The same trend seemed to emerge Thursday morning. An early read on third-quarter productivity came in unchanged, versus forecasts for a rise of 1.1 percent.

Unit labor costs, the report's inflation component, rose 3.8 percent, topping forecasts and reviving concerns about wage inflation.

A separate report showed a bigger-than-expected jump in weekly jobless claims. A third report, on factory orders in September, is due shortly.

Investors also eyed mostly weaker October sales from a number of retailers.

Among the standouts, Wal-Mart Stores (down $1.09 to $47.76, Charts) said sales at stores open a year or more, also called same-store sales, rose just 0.5 percent in the month. That was lower than the company's recently-reduced forecast for growth of 1 percent. Shares fell 1.8 percent.

Rival Target (down $1.29 to $56.41, Charts) posted a 3.9 percent rise in same-store sales, missing forecasts. Shares fell nearly 2 percent.

U.S. light crude oil for December delivery fell 36 cents to $58.35 a barrel in electronic trading.

Treasury prices slumped, raising the yield on the 10-year note to 4.59 percent from 4.56 percent late Wednesday. Bond prices and yields move in opposite directions.

COMEX gold for December delivery added $4.90 to $624.20 an ounce.