U.S. Stock Indexes Finish Mixed
Major U.S. stock indexes closed mixed Monday, though the market overall was broadly lower.
Investors clearly were stepping cautiously in the wake of last week’s plunge, but Friday’s heavy selling pressure didn’t carry over to Monday.
The Dow Jones industrial average opened at 9,603.36, just two points below its Friday close. The Dow quickly fell 100 points, then rebounded and traded in a narrow range for much of the day. It closed off 0.34 point at 9,605.51.
The technology-dominated Nasdaq composite index opened 14 points below Friday’s close, then rallied modestly. It ended with a gain of 7.68 points, or 0.5%, at 1,695.38.
The Standard & Poor’s 500 index, which on Friday broke through its spring low to close at the weakest level in nearly three years, gained 6.76 points, or 0.6%, to 1,092.54 Monday.
Still, falling stocks outnumbered winners by nearly 2 to 1 on the New York Stock Exchange and by 22 to 14 on Nasdaq. Trading volume was moderate.
“I think people don’t know what to do so most aren’t doing anything,” said Jon Brorson, director of equities at Northern Trust. “There’s no conviction out there; there are no real buyers. People don’t want to miss it when the market bounces back, but by the same token they’re not willing to step in and buy.”
The uneventful session provided at least a temporary pause from the selling that has dominated Wall Street in recent weeks. Hundreds of companies already have warned about disappointing third-quarter earnings because of the weak economy. More warnings are expected for the rest of the month.
The Dow tumbled 3.5% last week, while Nasdaq slid 6.5%. Selling accelerated on Friday, when the government reported a surprisingly large jump in the unemployment rate in August.
Analysts say the market won’t recover until the economic and corporate news starts to show signs that business is stabilizing.
They also say investors want to see that the seven interest rate cuts made this year by the Federal Reserve are having an effect. So far, that hasn’t happened.
Some Wall Street pros believe that the Fed could cut rates an eighth time even before policymakers’ next scheduled meeting Oct. 2.
But long-term Treasury bond yields, which fell sharply on Friday, rebounded Monday. The 10-year T-note yield ended at 4.84%, up from 4.78% Friday. Shorter-term yields were little changed, however.
Among Monday’s highlights:
* Major tech stocks ended mixed. AOL Time Warner jumped $2.13 to $34.41, Dell Computer gained $1.02 to $22.57 and Motorola rose 75 cents to $15.04, but Corning fell 55 cents to $10.40 and Electronic Arts lost $1.87 to $54.27.
* Some big telecom shares rebounded. SBC Communications rose $2.43 to $43.43 and Verizon Communications rose $1.65 to $50.70.
Qualcomm jumped $1.36 to $50.54 after Credit Suisse First Boston analyst Tim Long said sales of mobile phones that use a new Qualcomm technology appear to be increasing. Long raised his rating on the shares to “buy” from “hold,” Bloomberg News reported.
* Drug stocks lured buyers. Merck added $1.80 to $66.10 and Pfizer rose $1.17 to $38.17.
* Boeing tumbled $1.72 to $43.36, a 14-month low, after the company said it could take a $1.4-billion charge if it loses a legal appeal over the government’s termination of a contract for the A-12 stealth fighter.
* Many bank stocks continued to slide on worries about the economy. Citigroup lost 97 cents to $42.45 and Downey Financial dropped $2.38 to $43.82.
* Home builders’ shares weakened again. Centex fell $1.76 to $38.34, Pulte Homes dropped $1.18 to $32.01 and KB Home fell 89 cents to $29.51.
Market Roundup, C9, C10
