Stocks Wilt With Investors Uncertain

Stocks sagged in another slow summer Monday trading session, with technology, retail, home-builder and utility shares leading the way lower.

The Nasdaq composite index slid 32.07 points, or 1.6%, to 2,034.26 after rising 1.8% last week.

The Dow Jones industrial average lost 111.47 points, or 1.1%, to 10,401.31. The Dow had risen 0.9% last week.

Trading volume on the New York Stock Exchange was less than 1 billion shares, the second-slowest full-day trading session of the year.

Sellers had the upper hand for most of the day, after a brief jump in share prices at the start of the session.

With second-quarter earnings-reporting season largely over, investors are focusing on the potential for corporate profits to rebound in the quarters ahead--or not.

Semiconductor stocks, which led last week’s Nasdaq rally, pulled back Monday after brokerage Salomon Smith Barney cut its profit and revenue targets for Intel, and Lehman Bros. warned that the chip giant’s price war with rival Advanced Micro Devices will worsen.

Intel dropped $1.40 to $30.28, and AMD fell $1.63 to $17.62.

“Whenever we think we can go back in and play again, something like this happens,” lamented Charles Pradilla, strategist for SG Cowen Securities.

“It shows how much tentativeness and uncertainty there is out there,” said Alan Ackerman, executive vice president of Fahnestock & Co. “Investors are in no hurry to buy.”

Among other tech shares, Novellus Systems slid $1.09 to $52.28, Autodesk dropped $1.48 to $36.30, and Cisco Systems gave up 51 cents to $19.54. Cisco will report quarterly earnings today.

Utility stocks also were weak. A Barron’s magazine story over the weekend cited some analysts’ fears that a power-plant glut is looming.

Among major electric utilities, American Electric Power fell $1.39 to $44.91, TXU fell $1.49 to $47.02, and Duke Energy dropped $1.48 to $38.42. The Dow Jones utility index slid 2.7%.

Retail stocks were broadly lower on worries about July sales, which most firms will report on Thursday.

Radio Shack, which said Monday that July sales fell 6% versus a year earlier, was downgraded by Merrill Lynch. The stock dropped $2.45 to $26.45.

Best Buy, another electronics retailer, fell $2.68 to $64.75.

Other retail losers included Sears, off $1.04 to $45.23; Ann Taylor, down $1.58 to $28.44; and Toys R Us, off $2.11 to $20.25.

Stocks of home builders, many of which had rallied sharply in July, sold off. KB Home slumped $2.25 to $28.95 and Lennar sank $2.30 to $42.

Heavy-industry shares also were under pressure. Caterpillar dropped $1.50 to $52.95, and Emerson Electric slid $1.07 to $56.24.

On the plus side, investors turned to some HMO stocks, pushing First Health up 37 cents to $27.01 and Wellpoint Health up 13 cents to $100.88.

Some real estate investment trusts also attracted buyers. Avalonbay Communities rose 19 cents to $49.18, and Centerpoint Properties gained 38 cents to $47.88.

In the bond market, Treasury yields were mixed ahead of the government’s sale of $27 billion in longer-term securities this week. The sale begins today with the auction of 4 3/4-year notes.

In currency trading, the euro dropped for the first day in four against the dollar after a report showed German manufacturing orders fell for a fifth time this year in June, raising concerns an economic recovery in the 12 nations that share the euro may be delayed.

The euro ended in New York at 88.2 cents, down from 88.4 cents Friday.

In Argentina, the Merval stock index fell 3.5% to a new multi-year low of 301.54. A $15-billion loan the International Monetary Fund is pledging Brazil suggests the lender wants to help South America’s biggest economy prepare for a potential debt default by Argentina, analysts said.

“They’re saying Argentina is pretty much on its own,” said Bob Kowit, who manages the Federated International High Income Fund and Federated Strategic High Income Fund, which together have about $500 million in emerging-market assets.

Meanwhile Monday, Mexico sold $1.5 billion of 30-year bonds, 50% more than planned, at yields that indicate the country doesn’t appear to be paying a price for Argentina’s financial crisis.

The bonds were priced to yield 9%, about 3.35 percentage points more than U.S. debt of comparable maturity. That’s less than what Mexico’s debt yielded earlier this year, before the Argentine crisis.

The Mexican stock market lost 1% Monday.

Market Roundup, C9-C10