Dow Falls as Investors Grow More Cautious
Blue-chip stocks fell Monday as investors’ increasing caution prevailed over optimism about a likely interest rate cut this week.
The Dow Jones industrial average closed down 100.37 points, or 1.0%, at 10,504.22, its second straight session of triple-digit losses.
Broader stock indicators were mixed, reflecting tech’s overall stronger performance. The Nasdaq composite rose 16.03 points, or 0.8%, to 2,050.87, while the Standard & Poor’s 500 index eased 0.6%.
Declining issues outnumbered advancers by 3 to 2 on the New York Stock Exchange; winners and losers were dead even on Nasdaq. Trading volume was subdued.
Blue chips’ weakness came despite widespread expectations that the Federal Reserve will cut interest rates for the sixth time this year when it concludes its meeting Wednesday. Although stocks rose initially Monday, that trend reversed as the day went on, a sign that investors remain wary after weeks of companies reducing earnings projections and cutting jobs.
“It’s not a surprise that the Fed is probably going to cut rates, so there’s not a lot for the market to react to,” said Bryan Piskorowski, market commentator at Prudential Securities. “You also have a little bit of skittishness. We’re still having earnings pre-announcements, and investors are unwilling to step up and buy.”
The bond market, meanwhile, was quiet as traders awaited the outcome of the Fed meeting.
In the Dow, some of the most notable declines included Home Depot, which dropped $1.71 to $49, and heavy-industry issues Caterpillar, down $2 to $52.65, and Alcoa, off $1.10 to $38.
American Express fell 87 cents to $39.88, even though the financial sector would be expected to benefit from more rate cuts.
Technology stocks, which have been battered in recent weeks, fared better on a small lift from issues such as Intel, up $1.07 at $28.58, and Cisco Systems, which gained 99 cents to $18.51.
Some analysts said tech stock prices are starting to look attractive after weeks of losses caused by increasing fears that the economy won’t rebound until next year.
“I think that in the technology companies we’re probably getting close to a bottom,” said Robert Harrington, co-head of listed block trading at UBS Warburg. “We’re getting lower interest rates. Now all we have to do is wait for earnings to improve.”
Among Monday’s highlights:
* Biotechnology stocks fell after analysts cut their ratings for group leader Biogen, which tumbled $5.46 to $54.41. Genentech slid $1.71 to $54.39. Genzyme fell $2.73 to $52.52, Amgen lost 89 cents to $64.25, Gilead Sciences dropped $3.61 to $57.52, and Protein Design Labs fell $1.77 to $77.90. The Amex biotech index was off 3.3%.
* Some software stocks bucked the tech rebound. Siebel Systems, which makes customer relation management software, dropped $2.20 to $40.06. Veritas Software, whose products help manage data storage, fell $2.70 to $61.44. BEA Systems, whose software runs Internet sites, dropped $1.04 to $31.03.
* Washington Mutual dropped $1.90 to $37 after the nation’s largest savings and loan confirmed it was buying Dime Bancorp for $5.2 billion in cash and stock. Dime shares gained $1.02 to $37.90.
* Natural gas fell to a 13-month low on expectations that mild summer weather will reduce demand for the fuel, which is used to generate electricity for air conditioning in much of the U.S.
Gas futures for July delivery fell 29.6 cents, or 7.9%, to $3.45 per million British thermal units on the New York Mercantile Exchange, the lowest closing price for a most-active contract since May 15, 2000, and the biggest one-day decline since Feb. 14.
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Market Roundup, C9-10
