Portfolio Realignment Leaves Stocks Mixed
Stocks ended mixed Wednesday, a far better showing than on Monday and Tuesday, as institutional investors rearranged their portfolios ahead of the end of the quarter.
The Dow eased just 2.96 points to 10,628.36, recovering from a low of 10,579, as buying picked up in the final half hour.
The Nasdaq composite, however, gave up 32.80 points, or 0.9%, to 3,656.30, its fifth straight decline. The index now is 2 points below the closing low on Aug. 2 that preceded August’s strong rally.
Winners held a narrow edge over losers on the New York Stock Exchange, while on Nasdaq losers topped winners by 24 to 15.
Trading volume was heavy, which analysts said reflected end-of-quarter shifts by institutional investors and mutual fund managers.
With the third quarter ending Friday, some managers are rushing to pick up stocks that fared well in the quarter to improve the look of their quarterly financial statements for investors.
Among the prominent winners Wednesday: energy stocks and electric utilities. The Amex oil-sector index is up 4.6% since June 30, while the Standard & Poor’s 500 index is down 1.9%.
A rally in mid-size stocks pushed the S&P; mid-cap index up 0.4% Wednesday. It has surged 9.8% in the third quarter so far.
In recent weeks, the market has been fixated on the approach of third-quarter corporate earnings reports. Increasing indications that the economy is slowing, combined with oil prices at decade-high levels and Europe’s weak currency, have the market pessimistic about earnings for many companies.
Indeed, the number of companies warning about results is far higher this quarter than a year ago.
A sales-shortfall warning Wednesday from Priceline.com drove its shares down $7.89 to $10.75 and depressed much of the Internet sector.
“Yesterday it was Kodak, today it’s Priceline and I’m sure it’ll be somebody else tomorrow,” said Todd Clark, head of listed trading at WR Hambrecht & Co. in San Francisco. “Until we can get out from under this black cloud of earnings pre-announcements, the market” isn’t going to rise.
Speculation that Motorola Inc. also would warn of disappointing profit helped drive many tech stocks lower early Wednesday.
After Motorola spokesman George Grimsrud said the company hadn’t changed its earnings forecast, tech shares rebounded, then fell again late in the day.
Motorola closed off $1 at $29.06 in late trading. It had been as low as $27.25 early in the day.
“Technology is seeing some real concerted selling across the board on profit-taking. It’s fear of a [business] slowdown,” said Scott Bleier, chief investment strategist at Prime Charter.
Hewlett-Packard helped its shares when its chairman said the company is “on track” for the quarter. The stock, which traded as low as $98.13, ended with a gain of $5.38, at $103.50.
In commodity markets, crude oil futures in New York were off slightly, ending down 4 cents at $31.46 a barrel. But heating oil futures jumped 2% after an American Petroleum Institute report late Tuesday showed that U.S. refiners were making little headway in storing the fuel for use during the cold-weather months.
Heating oil supplies are 36% below levels of a year ago, when inventories reached their seasonal peak, the industry-funded API said. However, analysts concede those figures don’t include oil that may be in private storage.
In currency trading, the euro was little changed amid concern that Danish voters will reject a proposal to adopt the 21-month-old currency in a referendum today.
The latest polls show Danish opponents and supporters running neck and neck. Rejection may fuel concern that the 11 euro countries, which are set to add Greece next year, won’t be able to persuade bigger European economies such as Sweden and Britain to take on the currency as well, analysts said.
The euro ended flat at 88.3 cents in New York.
Among Wednesday’s highlights:
* Energy stocks gaining for the day included Exxon Mobil, up $2.63 to $89.25; Chevron, up $2.13 to $85.44; Conoco, up $1.06 to $25.50; and Schlumberger, up $2.56 to $81.56.
* In the utility sector, NRGEnergy surged $3.69 to $34.69,Unicom gained $1.39 to $55.27 and Reliant Energy jumped $2.96 to $44.33.
But Edison International, parent of Southern California Edison, plunged $3.19 to $19.88 on concerns about its heavy borrowing to cover losses on purchased power.
Those concerns also sent PG&E;, parent of Pacific Gas & Electric, down $1.92 to $25.39 in late trading.
* In the Internet sector, Yahoo fell $12.06 to $90.38 and EBay slid $7.19 to $63.50.
Among major tech stocks, Gateway fell $4.57 to $49.04, Apple lost $2.50 to $48.94 and LSI Logic gave up $3.13 to $28.88, but Cisco Systems added $2.13 to $57.31.
Also, a stronger-than-expected earnings report helped push 3Com up $3.06 to $17.
* Telecom stocks were particularly weak, with Nortel Networks down $5.75 to $59.63 on sales concerns.
* Home Depot gained $1.38 to $54.75. Merrill Lynch & Co. analyst Peter Caruso added the biggest U.S. home-improvement chain to the firm’s “Focus 1” list.
* Toy giant Mattel jumped $1.63 to $12.25. There were rumors the company is close to a deal to sell its troubled Learning Co. unit.
* Becton Dickinson climbed $4 to $26.38. The medical-supply company said it will cut 1,000 jobs, or 4.2% of its work force, and take other cost-saving measures in the next year to boost profits.
* AvantGo rose $8 to $20 in its first day of trading. The maker of software linking the Internet to wireless phones and hand-held computers sold 5.5 million shares at $12 each.
Market Roundup: C11, C12
