Stocks Slip in a Bout of Profit-Taking
Profit takers left Wall Street with broad losses Tuesday, sending Nasdaq to its first decline in five sessions.
Meanwhile, a seemingly benign inflation report failed to spark a rally in the bond market, where traders in recent sessions have fretted that inflation pressures might still be growing. Yields closed mostly unchanged and near three-week highs.
On Wall Street, nervousness ahead of some key corporate earnings reports released after trading ended helped drive the Nasdaq composite down 97.50 points, or 2.3%, to 4,177.17.
The Dow industrials slid 64.35 points, or 0.6%, to 10,739.92. The Standard & Poor’s 600-share small-stock index lost 1.3%.
Trading volume remained moderate at 1.5 billion shares on Nasdaq, while losers topped winners by about 3 to 2.
“We’re getting some profit-taking in the market and that’s about it,” said Richard Dickson, technical analyst at brokerage Scott & Stringfellow in Richmond, Va. “The Nasdaq gained 5.5% last week. The Dow was up every day last week and off just 8 points [Monday]. So the market is just acting a little tired.”
Major technology stocks were mostly lower, including some that had reported better-than-expected earnings Monday.
Lattice Semiconductor, for example, fell $3.81 to $74.75 even though the chip maker reported earnings well above expectations. Likewise, chip-equipment firm Novellus Systems dropped $5.86 to $62.58 despite sharply higher profit.
Chip stocks in general were hurt by Merrill Lynch investment strategist Richard Bernstein’s comments that investors should lighten up on recently hot chip shares.
After regular trading ended, two key tech names--Intel and Microsoft--both reported quarterly earnings that beat expectations. Intel had fallen $3.31 to $143 in regular trading and Microsoft had edged up 31 cents to $78.50.
In the bond market, the June consumer prices report failed to motivate buyers. The 10-year Treasury note yield ended at 6.15%, unchanged from Monday.
Some bond traders may have been eyeing the latest surge in oil prices after OPEC backtracked on plans to raise output. Near-term crude futures jumped $1.11 to $31.94 a barrel.
In currency trading, the euro fell to a seven-week low against the dollar, dropping below 93 U.S. cents, as currency traders bet U.S. interest rates may continue to rise, making the dollar more attractive.
Among Tuesday’s highlights:
* Stocks reacting to earnings reports included Merrill Lynch, down $3.72 to $128.25; Charles Schwab, up $1 to $38.25; Philip Morris, up 44 cents to $24.06; GM, up 44 cents to $60.81; and Wells Fargo, down $1.31 to $42.06.
* In the tech sector, Unisys was hammered, falling $3.13 to $11, after saying second-quarter profit fell 52% because of declining revenue from its mainframe businesses.
* Other tech shares down sharply included Applied Materials, off $5.13 to $88.99; Adobe Systems, down $4.13 to $130.94; and Seagate, which plunged $11.06 to $53.50.
* Many telecom stocks also lost ground, including JDS Uniphase, down $4.50 to $111.31, and Ciena, down $4.06 to $156.94. But Wireless Facilities surged $5.75 to $80.50.
* Many energy stocks rallied with crude oil prices. Murphy Oil jumped $1.94 to $60.88 and Trans-ocean Sedco rose $2.75 to $52.38.
* In the food sector, Keebler Foods jumped $1.31 to $35.38. It said it will explore a number of options for boosting its stock, including the possibility of a merger.
Foreign markets were broadly lower, led by Japan, where the Nikkei-225 index fell nearly 2% despite the Bank of Japan’s decision Monday to hold interest rates near zero.
*
Market Roundup: C9-10
