Head Fake or True Reversal ?

U.S. stocks retreated as disappointing earnings at Kraft Foods Inc. and Walt Disney Co. triggered a sell-off in consumer shares, overshadowing unexpected improvement in service industries.

Disney, the second-largest U.S. media company, slumped 8.5 percent after earnings decreased by almost a third. Kraft Foods, the world’s second-largest foodmaker, slid 8.8 percent after saying profit will be less than it previously forecast as the stronger dollar hurt overseas results. Benchmark indexes rose in early trading after the Institute for Supply Management said non-manufacturing businesses shrank less than economists forecast.

Delinquencies on U.S. credit cards rose to record highs in January as the economic recession weakened consumers’ finances, Fitch Ratings said on Wednesday.

Payments at least 60 days late measured by a Fitch index rose 0.47 percentage point to 3.75 percent last month, after accelerating in the fourth quarter, Fitch said in a statement. The previous record was 3.73 percent in February 1997.

“U.S. consumers continue to struggle in the face of mounting pressures on multiple fronts, from employment to housing to net worth,” Michael Dean, a managing director at Fitch, said in the statement.

Concerns that the U.S. recession will deepen as foreclosures rise and businesses lay off thousands have sparked a flurry of unconventional moves to spur growth, including credit-easing measures that have already doubled the size of the Federal Reserve balance sheet to more than $2 trillion.