Shares Drop Modestly as Investors Pull Back
With the much-ballyhooed initial public stock offering of Google behind them and oil chugging to a new high, investors took a step back Thursday, sending stocks lower.
The downward trend underscored that the equity market was deeply mired in the trading doldrums characteristic of late summer, though analysts said there are additional pressures this year.
Fears that the Olympics in Athens or the upcoming Republican National Convention in New York might be targets of terrorism have kept many investors on the sidelines, and oil prices aren’t helping, said Janna Sampson, director of portfolio management at Oakbrook Investments.
“People are thinking there is just no good reason to take on this risk,” Sampson said. “I know I’ve got clients who are telling me they have money but they’re waiting until after these things are over. And we don’t often see institutional investors holding up for events.”
The Dow Jones industrial average declined 42.33 points, or 0.4%, to 10,040.82.
The broader gauges were also lower. The Nasdaq composite index fell 11.48 points, or 0.6%, to 1,819.89. The Standard & Poor’s 500 index slipped 3.94 points, or 0.4%, to 1,091.23.
Declining issues outnumbered advancers by about 4 to 3 on the New York Stock Exchange.
Oil prices soared $1.43 to $48.70 a barrel on the New York Mercantile Exchange on worries about possible new attacks on oil facilities in southern Iraq.
Further rattling traders, a radical Iraqi cleric rejected an offer to peacefully end his militia group’s 2-week-old standoff in Najaf.
In economic news, the number of Americans filing new claims for unemployment benefits fell for a third consecutive week, suggesting improvements in the labor market after a rough patch earlier this summer. But analysts pointed out that the figures did not include the effect of Hurricane Charley, which will be reflected in next week’s data.
Separately, an index designed to predict future economic activity fell in July for the second consecutive month, reinforcing other data that had indicated the expansion was slowing. The Conference Board’s index of leading economic indicators was pulled down by signs of weaker demand for some goods and by a decline in the nation’s money supply, among other factors.
Fear of a weaker economy, and slower growth in corporate earnings, had helped to trigger widespread selling on Wall Street in July.
With many stocks oversold after weeks of losses, the bounce seen during the previous four sessions could simply have been a brief counter-rally, some analysts said.
The tech sector remains an area of special concern.
“Some of the market’s bellwethers are technology issues, and they’re very sensitive to the economy,” said Steven Goldman, chief market strategist with Weeden & Co. in Greenwich, Conn. “If there is a shadow of doubt, investors become risk-averse.”
Treasury bonds were little changed, with the yield on the benchmark 10-year note falling to 4.22% from 4.24% on Wednesday.
In other markets highlights:
* Google, which set its final IPO price at $85 late Wednesday, closed up $15.34 at $100.34. Other search engines, closely watched as Google came to market, were mixed. Yahoo lost 37 cents at $28.11, Ask Jeeves fell 4 cents to $26.04 and FindWhat.com rose 5 cents to $13.90.
Amazon.com was down 73 cents at $38.63 after announcing plans to buy China’s largest online retailer, Joyo.com, a deal valued at $75 million.
* Delta Air Lines shed a penny to $4.06 after the struggling carrier said more job cuts were ahead as it tried to avoid a bankruptcy filing.
* Gold prices rose $2.80 to $407.10 an ounce, a four-month high, lifting the stocks of mining enterprises. Newmont Mining gained $1.76 to $44.03. Freeport-McMoRan Copper & Gold, majority owner of the world’s biggest gold mine, climbed $1.10 to $35.60.
* Petsmart lost $1.46 to $28.36. The No.1 U.S. pet supplies retailer reported fiscal second-quarter sales of $806 million, trailing the $815.1-million average analyst estimate in a Thomson First Call survey.
