Tech Stocks Slip in Quiet Trading; Oil Falls Again
A brokerage firm’s negative outlook for the semiconductor industry pressured tech shares Thursday, but overall U.S. stocks were mixed in what was the slowest trading day of the year.
Late summer trading is known for being thin, but with the Republican National Convention in New York next week, Wall Street is even less crowded than usual for late August. And as many traders prepared to take the week off and some money managers planned to reduce staff levels, the market’s lack of conviction was reflected in low trading volumes.
Another drop in oil prices was a bright spot, even though analysts weren’t sure it would hold.
“A week ago, people were asking where the top in crude is and now they’re asking where the bottom is,” said Todd Clark, head of listed equity trading at Wells Fargo Securities. “It’s a sea change that’s welcome for equities, but against the backdrop of a big event next week that will keep players away from the market, it’s tough to get too excited.”
The Dow Jones industrial average closed down 8.33 points, or 0.1%, at 10,173.41.
The broader gauges were mixed. The Nasdaq composite index shed 7.80 points, or 0.4%, to 1,852.92, while the Standard & Poor’s 500 index edged up 0.13 point, or 0.01%, to 1,105.09.
Five stocks rose for every four that fell on the New York Stock Exchange, where composite volume came to 1.25 billion shares.
In economic news, the number of people who signed up for unemployment benefits rose last week by a seasonally adjusted 10,000 to 343,000; economists had expected an increase of just 4,000. At least half of those filing new claims were out of work because of Hurricane Charley, the Labor Department said.
Traders attributed a drop in U.S. Treasury yields to the rise in initial jobless claims. The yield on the benchmark 10-year note fell to 4.21% from 4.26% on Wednesday.
Oil prices, which set a record by topping $49 a barrel last week, fell for the fifth straight day, losing 37 cents to $43.10 a barrel.
Among the day’s market highlights:
* Semiconductor shares such as Intel pulled Nasdaq lower after Banc of America Securities analyst John Lau said demand for chips had peaked amid an economic slowdown.
Intel retreated 18 cents to $21.77 and Advanced Micro Devices fell 38 cents to $11.82 after Lau lowered his profit forecast for Intel and reduced his rating on Advanced Micro to “neutral” from “buy.”
Micron Technology, the No. 2 maker of computer memory chips, eased 20 cents to $11.83, while Irvine-based Broadcom lost 58 cents to $29.23. Lau trimmed earnings estimates for both companies.
* Shares of Cupertino, Calif.-based Apple Computer rose to the highest level in nearly four years, gaining $1.61 to $34.66, on speculation that Hewlett-Packard would introduce a version of its iPod player as soon as today. Hewlett-Packard rose 9 cents to $18.19.
* Starbucks shed $2.97, or 7%, to $43.07, the day’s biggest decline among S&P; 500 stocks. August same-store sales for the largest U.S. coffee chain increased 8%, less than the 11% average gain in the first 11 months of the company’s fiscal year.
* Krispy Kreme Doughnuts tumbled $1.59 to $13.77. The No. 2 U.S. doughnut maker said second-quarter earnings fell 56% because of costs to close unprofitable stores. The company abandoned its profit forecast for its fiscal year.
* Apollo Group, operator of the largest for-profit education company in the U.S., surged $6.08, or 8%, to $79.42, for its largest gain since October 2002. The company raised its 2005 earnings forecast to $2.40 a share, 6 cents higher than the average analyst estimate, according to Thomson First Call.
* Shares of Gilead Sciences climbed $2.42 to $69.24. The Foster City, Calif., company said a combination of its AIDS drugs helped lower HIV blood levels to a set target more effectively than a competing GlaxoSmithKline treatment in a study.
