Dow, S&P; 500 End Lower Amid Mixed Signals From Earnings
The blue-chip Dow Jones industrial average and the broad Standard & Poor’s 500 index finished slightly lower Tuesday after crude oil prices remained near $60 and companies gave mixed signals on earnings. Technology stocks, however, received a lift from a brokerage upgrade of the semiconductor sector.
The market outlook worsened after the bell when Ford Motor cut its full-year earnings forecast and said it was planning more job cuts to offset slumping North American sales. Shares of Ford fell to $10.76 in after-hours trading after closing at $11.17, up 6 cents.
“I can see the auto stocks trading off on this news,” said Paul Nolte, director of investments at Hinsdale Associates.
“We are seeing a slowdown in the general economy, and what Ford and General Motors are experiencing and talking about is very endemic to the overall economy,” Nolte said. “The news may affect sentiment to a certain extent.”
Kroger was a bright spot, however, with the grocery chain jumping $1.76, or nearly 10%, to $19.45 after posting a 12% rise in quarterly profit and raising its annual earnings outlook.
Crude oil futures rose to $59.70 a barrel during the session -- the highest since the New York Mercantile Exchange launched crude futures trading in 1983 -- before settling at $58.90, down 47 cents.
The Dow fell 9.44 points, or 0.1%, to 10,599.67. The S&P; 500 was down 2.49 points, or 0.2%, at 1,213.61.
But the technology-laced Nasdaq composite index climbed 2.94 points, or 0.1%, to 2,091.07. Nasdaq was aided by Lehman Bros., which raised its rating on the semiconductor sector to “positive” from “neutral.”
“The Lehman upgrade is giving technology stocks an uptick simply because nothing else is going on,” said Marc Pado, U.S. market strategist at Cantor Fitzgerald. “But we are transfixed on oil with $65 a barrel just a heartbeat away. There are a few earnings warnings here and there.”
Bonds posted a strong rally after Monday’s sell-off, with the yield on the 10-year Treasury note falling to 4.04% from 4.11% on Monday. Bond yields fall as their prices rise.
Traders were betting that high energy costs would further burden an economy that has already shown signs of softness, especially with prices for crude oil hovering near $60.
In other market highlights:
* Chip makers gained on the Lehman Bros. upgrade. Intel, the world’s biggest chip maker, added 28 cents to $27.18. Texas Instruments, the No. 1 maker of mobile phone chips, rose 36 cents to $28 and Broadcom gained 76 cents to $36.41.
* William Lyon Homes shares jumped $1.55 to $92.55. After the market closed Monday, a special committee of the Newport Beach-based builder’s board rejected an $82-a-share takeover offer from the company’s founder, calling the bid “inadequate.”
Also in the building sector, Lennar surged $1.34 to $63.41 after reporting fiscal second-quarter earnings that were above expectations.
* Steel stocks continued to slide on concerns about a supply glut. Nucor dropped $2.25 to $50.68 after warning that earnings in the current quarter would be near the lower end of its previous forecast. U.S. Steel lost 90 cents to $38.51 and Commercial Metals sank $1.51 to $25.62.
* Energy shares were broadly lower as crude prices pulled back. Amerada Hess dived $3.82 to $107.11, Occidental Petroleum slid $2.16 to $78.52 and Noble Energy fell $1.99 to $75.56.
But Unocal gained $1.38 to $64.85 on speculation that a Chinese company could top Chevron’s takeover offer for the El Segundo company. Chevron fell 56 cents to $58.78.
* Dolby Laboratories soared $2.93 to $22.88. The San Francisco sound-systems company said its 5.1 digital service was adopted by Shanghai Media & Entertainment Group for broadcast in China.
* South Pasadena-based Cogent Systems rose 84 cents to $26.18. After the market closed, the fingerprint-systems company said an offering of 11 million shares -- 4 million by the company and 7 million by insiders -- was priced at $25.50 a share.
