Investors Sit Out; Stocks Edge Lower
The stock market traded lower Thursday as skittish investors saw little reason to buy in a business environment that shows slim chances of improving any time soon.
Stocks fell across sectors, and technology issues gave up slight gains made early in the session, when some investors were searching for bargains.
“It’s a hunt-and-peck type market,” said Alan Ackerman, executive vice president of Fahnestock & Co. “Bargain hunters are looking for specific issues, and their timetable is extremely short. It is an in-and-out mentality.”
The Dow Jones industrial average, which has alternated between winning and losing sessions all week, finished the day down 47.75 points, or 0.5%, at 10,229.15. Investors were locking in profits from Wednesday’s 102-point rally, which followed a 145-point sell-off Tuesday.
Broader stock indicators, which have likewise fluctuated, also fell. The Nasdaq composite index declined 17.04 points, or 0.9%, to 1,842.97, while the Standard & Poor’s 500 index slipped 3.22 points, or 0.3%, to 1,162.09.
More than three stocks fell for every two that rose on Nasdaq, while winners outnumbered losers by a 7-6 ratio on the New York Stock Exchange. Trading was light.
The market’s inability to advance Thursday wasn’t surprising given the lack of enthusiasm on Wall Street recently. Investors, tired of stock rallies that ultimately fizzle on bad corporate or economic news, have become increasingly hesitant about making commitments to the market.
Thursday’s disappointing economic news was a government report that the number of Americans receiving unemployment benefits has reached the highest level in nine years.
Also weighing on sentiment was a report from the Federal Reserve Bank of Philadelphia that said the outlook for economic growth darkened over the last three months, and private-sector economists expect weaker growth and higher unemployment in the months ahead than previously thought.
The Dow’s biggest loser was Merck, which slid $2.71 to $68.51, still suffering from a study earlier in the week that said its arthritis drug Vioxx might increase the risk of heart attacks.
Other stocks dropped on indications that business remains poor.
Specialty retailer Limited tumbled $1.27 to $13.93, after issuing profit warnings for the third quarter and the year. Intimate Brands, which operates Victoria’s Secret and Bath & Bodyworks, fell $1.22 to $13.39 after trimming its third-quarter earnings outlook.
Also, Kmart fell $1.13 to $10.97 after reporting a loss amid pressure to lower prices as it works to remodel its U.S. store base and boost customer traffic during a cutthroat price war with other retailers.
The Dow’s tech components all traded lower, with Microsoft posting the biggest loss, down $1.54 at $59.12.
There were some winners on Wall Street. Barnes & Noble advanced $1.21 to $41.97, after posting a smaller-than-expected loss for the second quarter. Fiber-optic networker Ciena, which will enter the S&P; 500, replacing American General as it merges with American International Group, rose 36 cents to $17.80.
Among other market highlights:
* Japan’s Nikkei stock average hit another 17-year low, tumbling 2.4% to 11,126.92. The drop was led by shares of export companies after slumping overseas demand cut Japan’s trade surplus in half in July.
Also overseas, Argentina’s Merval index lost 2.8% to 319.30 after gaining 8% on Wednesday on the announcement of a new aid agreement with international lenders.
* Gateway fell $1.18 to $8.61 on news its bonds had been downgraded to “junk” status by Standard & Poor’s. The No. 2 U.S. direct PC seller is restructuring in the middle of a price war and a broad downturn in the technology industry, especially in sales to consumers, Gateway’s main clients.
* The dollar traded lower against the euro and the yen, while long-term Treasury bond yields eased on concerns about continued sluggish economic growth.
Market Roundup, C6-7
