Stocks Fall Broadly as Intel Sales Disappoint
Stocks ended broadly lower Thursday and Nasdaq gave back all of Wednesday’s rally, as a report from semiconductor giant Intel disappointed investors and as oil prices rose.
Treasury bond yields continued to slide as the minutes of the Federal Reserve’s last meeting gave more credence to the idea that policymakers are nearly done tightening credit.
That notion, which helped send stocks sharply higher Wednesday, failed to help the market much Thursday.
The Dow Jones industrial average fell 83.32 points, or 0.8%, to 10,928.10, after gaining 212 points Wednesday.
The Standard & Poor’s 500 index fell 10.68 points, or 0.8%, to 1,249.13 after rising 1.9% on Wednesday.
The session was far tougher on technology shares and smaller stocks. The Nasdaq composite index plunged 41.29 points, or 2%, to 2,039.42, wiping out all of Wednesday’s 1.8% advance.
The Russell 2,000 small-stock index dropped 2.7% after gaining 3% in the previous session.
Losers topped winners by more than 2 to 1 on the New York Stock Exchange and on Nasdaq.
Intel’s report late Wednesday of a drop in sales in the second quarter sent its stock down at the opening and pulled Nasdaq with it. Intel ended down $1.39, or 7.5%, to $17.10.
EBay’s earnings report also was poorly received. Its shares slid $1.27 to $24.66, the lowest since 2003.
The tech sector overall tumbled despite a hefty gain in shares of Apple Computer, which jumped $6.40 to $60.50 after its earnings report. Motorola rallied on its earnings report as well, rising $1.35 to $20.60.
Some analysts said the market was likely to continue to have trouble sustaining a move in either direction, as investors waited for more clues to the economy’s trend in the second half of the year.
“From a fundamental perspective, with mixed earnings and positive news from the Fed, this would qualify as somewhat of an aimless market,” said Chris Johnson, manager of quantitative analysis for Schaeffer’s Investment Research.
A rebound in oil prices reminded investors of the risks to economic growth posed by record energy prices.
Near-term crude futures in New York rose 42 cents to $73.08 a barrel after dropping for three straight sessions from Friday’s record of $77.03.
Some investors bought bonds, figuring that all interest rates could slide if the Fed halts its credit-tightening program because of economic weakness.
The minutes from the Fed’s June 28-29 meeting, released Thursday, said policymakers then saw “significant uncertainty” on the future path of monetary policy.
The yield on the 10-year Treasury note slid to 5.03%, the lowest since June 13, from 5.05% on Wednesday.
In a sign that the economy may be cooling quickly, the Philadelphia Fed branch said its business activity index for the mid-Atlantic region fell to its lowest level since January as costs climbed.
That gave nervous investors another reason to sell stocks, on fears the corporate earnings growth could be crimped significantly.
Among the day’s market highlights:
* Chip stocks falling with Intel included Microsemi, down 91 cents to $22.89; International Rectifier, down $1.51 to $34.12; and Broadcom, off 64 cents to $26.35.
* Heavy-equipment maker Caterpillar led the Dow’s decline, falling $2.04 to $69.08. Peabody Energy, the world’s largest private-sector coal producer, forecast a third-quarter earnings shortfall. Caterpillar’s customers include major companies in the mining and energy sectors.
Peabody shares plunged $5.56 to $47.79.
* Yum Brands slumped $3.13 to $46 after the restaurant operator reported disappointing U.S. sales growth. Domino’s Pizza lost $2.04 to $21.84, also after reporting weak sales.
* The Dow transportation stock index slid 4.4%, the biggest drop since Oct. 9, 2002, on fears that a U.S. slowdown could hurt earnings of railroads, truckers and air transport companies.
Norfolk Southern lost $3.28 to $47.62. FedEx fell $4.32 to $108.13.
* On the plus side, Pfizer added 41 cents to $23.71 after reporting higher operating profit.
* Among banking companies, earnings reports lifted City National $1.56 to $66.56 and East West Bancorp $2.51 to $40.67.
* Occidental Petroleum fell $1.39 to $99.50 despite raising its dividend 22% and declaring a 2-for-1 stock split.
* Coca-Cola inched up 2 cents to $43.84. The company said its board authorized the repurchase of as much as 13% of its outstanding shares.
