Tech Stocks Fall; Dow Rises
Stocks ended mostly lower in light trading Monday, with some players off for the observance of Yom Kippur.
Worries about a potential U.S.-Iraq conflict weighed on markets for much of the day. After regular trading ended, Iraq said it would readmit United Nations weapons inspectors--news that helped send oil futures down sharply.
But the White House later said it was skeptical of Iraq’s offer.
On Wall Street most major indexes closed with slight gains or small losses, though the Dow Jones industrial average rose 67.49 points, or 0.8%, to 8,380.18, boosted by defense stocks.
The Nasdaq composite slid 15.52 points, or 1.2%, to 1,275.88 amid another sell-off in semiconductor shares.
The Standard & Poor’s 500 inched up 1.29 points to 891.10.
Losers outnumbered winners by 18 to 14 on the New York Stock Exchange and by 21 to 11 on Nasdaq.
The Commerce Department reported Monday that U.S. business inventories rose 0.4% in July. It was the third straight month of gains, offering hope for a strengthening economic recovery.
Still, analysts said investors remained nervous about the potential for war with Iraq. Those fears helped fuel three weeks of declines among key market indexes.
On Monday, President Bush continued to press for United Nations action against Saddam Hussein, telling Iowans in a speech that “if Iraq’s regime continues to defy us and the world [the United States] will move deliberately yet decisively to hold Iraq to account.”
Late in the day Iraq’s announcement that it would readmit U.N. inspectors sent oil futures for October delivery down $1.38, or 4.7%, to $28.29 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was the biggest drop since April 12.
Crude futures had eased 14 cents in regular trading.
Apart from war worries, investors are showing concern about third-quarter corporate earnings, analysts said. Those reports will begin to dominate business headlines in about three weeks.
“Investors are a little apprehensive about sticking their foot in the water ahead of [earnings] reports that could dictate the direction of the market,” said Todd Salamone, director of trading at Schaeffer’s Investment Research in Cincinnati.
Treasury bond yields traded lower for much of the session Monday, but rose toward the close as stocks showed more strength.
In currency trading the yen fell to its lowest level in 12 weeks against the dollar on speculation Japan may sell its currency to boost growth in the world’s second-largest economy. The dollar closed at 122.24 yen in New York, up from 121.73 on Friday.
Among the day’s highlights:
* Defense shares rose on war jitters. United Technologies gained $1.80 to $59.80, General Dynamics jumped $3.58 to $86.60 and Northrop Grumman was up $2 to $128.
Also, Boeing added $1.65 to $37.23. The company on Friday avoided a strike that would have halted airliner production.
* Oracle slid 45 cents, or 4.6%, to $9.28 ahead of its quarterly earnings report this week. According to Thomson First Call, analysts expect the world’s third-largest software maker to earn 7 cents a share in the latest quarter.
* Texas Instruments fell 73 cents to $18.27 after Prudential Securities lowered its rating for the world’s largest supplier of mobile-phone chips to reflect slowing demand for its products.
Also, Merrill Lynch & Co. analyst Mark Lipacis cut his 2002 and 2003 revenue and earnings estimates for PMC-Sierra Inc., Applied Micro Circuits Corp. and Vitesse Semiconductor Corp. They make chips for telecom companies.
PMC-Sierra dropped 48 cents to $5.36, Applied Micro lost 33 cents to $3.44 and Vitesse was off 4 cents to $1.23.
* Among financial stocks, Fannie Mae lost $1.72 to $70.98. The mortgage giant said the home loan refinancing wave is causing a mismatch in its assets and liabilities as loans are retired. But it said the mismatch can be fixed without hurting earnings.
Also, MGIC Investment, the largest seller of private mortgage insurance, tumbled $6.53 to $48.70, after saying second-half profit will fall short of analysts’ expectations as mortgage delinquencies rise.
Market Roundup, C8-9
