Profit Warnings Help Drag Markets Lower
Stocks were mostly lower in thin trading Monday, as profit warnings from some technology companies weighed on investor sentiment.
The Nasdaq composite bore the brunt of the decline, as losses in major tech stocks pulled the index down 106.93 points, or 2.8%, to close at 3,767.91.
The Dow industrials fell 49.85 points to 10,564.21.
Losers topped winners by 26 to 15 on Nasdaq, and the index closed at its low for the session.
But volume was just 1.28 billion shares--suggesting many investors are back on the sidelines.
On the economic front, investors are waiting on Wednesday’s report on May consumer prices.
The Treasury bond market rallied Monday, keeping further downward pressure on yields after a tame May wholesale inflation report Friday.
But traders said Treasuries also gained simply as some investors sold stocks in favor of safer securities. The 10-year T-note yield eased to 6.08% from 6.13% on Friday, and now is the lowest since April 24.
On Wall Street, an earnings warning from Citrix Systems, a maker of computer networking products, helped produce Nasdaq’s worst loss since May 23.
Citrix plunged $18.94 to $22.25.
Also, Computer Associates tumbled $8.88 to $50 after the software giant held a meeting with analysts, some of whom came away concerned about current-quarter sales and earnings. But the company declined to comment specifically on the quarter.
On the flip side, Corning, a major producer of fiber optic components, soared $21 to $223 after it said strong demand will generate better-than-expected quarterly earnings.
With three weeks remaining in the second quarter, companies are just beginning the “preannouncement” period, when companies give Wall Street advance notice of any disappointments or positive surprises. The quarter is generally expected to be a strong one for earnings, but analysts predict investors will punish any company that appears to be losing momentum.
Meanwhile, the market’s biggest worry remains the Federal Reserve, which meets June 27-28.
But “if the retail sales and consumer price reports [this week] show the economy slowing and inflation remaining tame, then we believe the odds are that the Fed will not be raising rates at that time,” said John H. Shaughnessy, chief investment strategist at Advest Inc.
Among Monday’s highlights:
* Harmonic slumped $18.69 to $38.75, another big weight on Nasdaq, after the telecom equipment supplier confirmed that sales to AT&T; are slipping. But Harmonic officials insisted they are still comfortable with analysts’ earnings estimates for the year.
* Among major tech stocks, Intel lost $2 to $125.06, Apple slid $4.56 to $91.19, Cisco Systems lost $2.25 to $62.13, Computer Sciences fell $3.13 to $86 and Oracle was off $2.13 to $80.56.
Also, the biotech sector was down sharply. The Amex biotech index tumbled 5.6%.
* Home Depot led retail stocks lower, falling $2.19 to $46. A Robinson-Humphrey analyst who met Friday with Home Depot management said this quarter’s sales could miss forecasts because of slowing consumer spending.
* Oil stocks were higher as crude prices surged. Exxon Mobil gained $1.56 to $80.75 and Transocean Sedco rose $2.31 to $48.88.
* Utility stocks turned higher as some investors hunted for “defensive” stock plays once again. The Dow utility index rose 1%.
Market Roundup, C14-C15
