Dow Snaps Winning Streak on Glum News
The Dow Jones industrial average closed out its first losing week in more than a month Friday as stocks struggled on disappointing news from household names McDonald’s and Nike.
“The market continues to have underlying skittishness, and it seems to be stuck,” said Marty Cunningham, head of trading for Charles Schwab & Co. “I don’t think you have what you need just yet” to sustain gains.
The Dow industrials slipped 52.17 points, or 0.5%, to 10,427.67. The broader Standard & Poor’s 500 index lost 4.89 points, or 0.4%, to 1,148.70. The Nasdaq composite index edged down 17.44 points, or 0.9%, to 1,851.39 after rallying briefly early in the day.
Losers outnumbered winners 4 to 3 on Nasdaq and the New York Stock Exchange on weak volume.
The Dow lost 1.7% for the week, snapping a five-week winning streak. The S&P; 500 fell 1.5%, marking its first weekly loss after three winning weeks. The Nasdaq was down 0.9%.
Negative comments from Salomon Smith Barney on oil field services companies and broadcasters put a dent in investor enthusiasm, as did some gloomy news from the telecom sector when Moody’s Investors Service cut its ratings for Lucent Technologies.
Investors also were spooked by what they see as prospects for higher interest rates this year after the Federal Reserve said Tuesday that the U.S. economy is growing.
“It’s a quiet market with low volume, but it seems people are a little hesitant with the potential for rate hikes coming,” said Ahmed Okumus, manager of the Okumus Opportunity Fund. Higher rates would put a cap on growth and may curb corporate profits.
Moody’s cut Lucent’s rating two notches, saying it will suffer a longer and deeper downturn in demand for its telecom products than expected. Lucent, the second-most-active stock on the Big Board, fell 20 cents to $4.59.
Widely held McDonald’s, a Dow stock, fell $1.05 to $27.65. The fast-food company said its yearly earnings would probably miss Wall Street’s forecasts as weak economies worldwide hurt sales.
Nike, the world’s largest maker of athletic shoes and clothing, tumbled $3.70, or almost 6%, to $59.50, after some analysts said they were disappointed in the outlook for Nike’s worldwide sales.
Shares of oil field services companies sold off after Salomon Smith Barney cut ratings on 14 firms, including Baker Hughes and Schlumberger, saying sharper-than-expected declines in the Western Hemisphere rig count are likely to push results below forecasts. Baker Hughes lost $2.55 to $36.75 and Schlumberger shed $2.90 to $57.15.
Salomon also cut its ratings on broadcasting companies after a recent run-up in these stocks. They included Clear Channel Communications, down 65 cents to $52.50.
In the tech sector, Micron Technology fell 61 cents to $33.90 after the maker of computer memory chips reported a loss as it saw sales decline from a year earlier.
Bond yields bumped up as investors anticipated rate hikes by the Fed. The yield on the benchmark 10-year Treasury note rose to 5.40% from 5.36% Thursday.
In other market news:
* Gold mining shares rose as the precious metal gained $4.50 an ounce to $297.30. Newmont Mining rose $1.13 to $26.37.
* The yen fell sharply, capping its biggest weekly loss against the dollar in three years. The Japanese currency closed at 132.78 to the dollar, up 0.90 yen.
* Dow member Boeing lost $1.28 to $46.39 after reports that the Navy and Marine Corps plan to slash by 30% purchases of the Joint Strike Fighter, made by Lockheed Martin, and Boeing’s F-18E/F fighters. Lockheed was off $1.40 at $56.25.
* Stocks whose performance is tied most directly to the economy also fell. Aluminum maker Alcoa fell 68 cents to $37.06 and International Paper, the largest paper maker, lost 90 cents to $42.27.
* Providing a bright spot, home builders’ shares rallied, such as KB Home, up $2.76 to $43.26, and D.R. Horton, up $2.01 to $39.06.
Market Roundup, C4
