Stocks Mixed as Investors Await Profit Reports
Stocks were mixed in a quiet session Monday as investors moved cautiously in advance of the second-quarter earnings-reporting season, which will begin in earnest this week.
The Dow Jones industrial average added 10.6 points, or 0.1%, to close at 10,646.58; the Standard & Poor’s 500 index dipped 3.28 points, or 0.2%, to 1,475.62; and the Nasdaq composite index slid 42.91 points, or 1.1%, to 3,980.29, despite the JDS Uniphase-SDL merger deal in the fiber-optic equipment sector.
Retail stocks rallied, as did biotech and heavy-industry shares.
Alcoa, the first Dow component to release second-quarter results, said profit was 2 cents per share above Wall Street expectations. Investors rewarded the aluminum producer, sending the stock up $2.38 to $30.
International Paper rose 81 cents to $32.25.
Retailers that have been battered this year because of slowing sales had a turnaround after Prudential Securities said bargains abound in the merchant stock sector. Circuit City Group rose $2.94 to $37.94, Best Buy climbed $3.38 to $74.13 and Gap rallied $2.38 to $37.88.
Investors sold major tech stocks after a brief run-up last week.
“It’s earnings season now, and these [tech] companies have to either put up or shut up,” said Bryan Piskorowski, a Prudential analyst.
Microsoft slipped $2.56 to $79.44, Intel fell $1.50 to $137.81, and Yahoo, scheduled to release its earnings today, dropped $6.50 to $110.
Monday’s early announcement by JDS Uniphase that it was buying smaller rival SDL for $41 billion sent JDS down $15.06 to $101.13 and SDL up $25.38 to $320.69.
In the commodity market, crude oil continued to slide, as did corn and soybean prices. Crude’s decline brought its loss since the end of June to nearly 9% amid mounting support within OPEC for Saudi Arabia’s plan to raise output.
Corn slid almost 2% to its lowest price this year, and soybeans dropped too, as Midwest rains extended weeks of wet weather and boosted prospects for one of the biggest crops ever this fall.
Treasury yields rose as traders awaited at least $13 billion in corporate debt likely to be sold this week. The 10-year yield rose to 6.03% from 6%. The 30-year yield rose .01 of a percentage point to 5.88%.
On the New York Stock Exchange, advancing issues bested decliners by 5 to 3. But trading volume was light.
Among other equity highlights:
* Bright spots in tech included Advanced Micro Devices, which rose $3 to $85 as Lehman Bros. upped its price target on the chip maker to $110 from $100.
Embarcadero Technologies rose $4.63 to $32.25 after the database software maker said it will offer two of its programs in Asian and Pacific markets.
Among Internet security software stocks, WatchGuard Technologies rose $4.19 to $58.63 and SonicWall gained $6 to $97 after they were rated “buy” in new coverage by Janney Montgomery Scott.
And in the biotech group, Genzyme rose $5.56 to $69.81, Protein Design Labs rose $11.31 to $180.13 and Chiron rose $2.19 to $59.13.
* Krispy Kreme Doughnuts sank $6.38 to $73.13. The company said fiscal second-quarter sales growth will exceed analyst expectations, but Barron’s said the stock, which has almost quadrupled in the three months since it came public, may be overpriced.
* Maxicare Health Plans fell back from its Friday surge, tumbling 94 cents to $1.69. The shares had more than tripled in two weeks as HMO stocks rallied.
Among other Southern California stocks, NetZero climbed 75 cents to $6 and Invitrogen dropped $18.75 to $58.38.
In foreign trading, stocks rallied in Asia, with key indexes rising 2.4% in Hong Kong and 1% in Japan. Markets were mixed in Europe, with indexes up 1.7% in Germany, down 0.5% in Britain and off 1.2% in France.
Market Roundup, C12-13
