Stocks decline in session
Wall Street pulled back Wednesday as investors, retrenching from an optimistic stance early in the week, waited to see how well the job market and corporate earnings had held up in an uneven economy.
The Dow Jones industrial average fell 79.26 points, or 0.6%, to 13,968.05. The index hit a record high of 14,087.55 on Monday, recouping the last of its midsummer losses.
But some investors have become nervous ahead of the government’s report Friday on September employment, analysts said. Concerns about profit growth in the technology sector also weighed on sentiment Wednesday.
On the plus side, home builders’ stocks rose amid a sense among some analysts that the housing market might have hit bottom.
“There are a lot of crosscurrents,” said George Shipp, chief investment officer at investment advisor Scott & Stringfellow in Richmond, Va. “The general pattern is that the U.S. economy is slowing.”
Broader stock indicators fell with the Dow. The Standard & Poor’s 500 lost 7.04 points, or 0.5%, to 1,539.59.
The tech-heavy Nasdaq composite slid 17.68 points, or 0.6%, to 2,729.43.
Losers topped winners by more than 3 to 2 on the New York Stock Exchange.
The Institute for Supply Management reported that the services sector of the U.S. economy expanded at a slower pace in September than in August. The trade group’s nonmanufacturing index fell to 54.8 from 55.8 in August.
Some analysts said that if the report had been weaker it could have ignited investor enthusiasm for another interest rate cut by the Federal Reseve, which lowered its key lending rate last month by a larger-than-expected half a percentage point.
Many investors expect the central bank to trim rates further this year, but there is debate over whether another reduction might come at the Fed policy-setting meeting on Oct. 30 and 31 or in December.
Treasury bond yields edged up Wednesday, suggesting that bond investors were growing less confident of another Fed cut. The yield on the benchmark 10-year Treasury note advanced to 4.56% from 4.52% on Tuesday.
In other economic news, the Mortgage Bankers Assn. said mortgage application volume fell 2.7% in the week ended Friday.
Still, home builders’ stocks attracted buyers for a third straight day. Lennar rose $1.10, or 4.5%, to $25.82, Pulte Homes rose 46 cents, or 3%, to $15.96, and KB Home gained $1.47, or 5.4%, to $28.72.
Among lenders, Downey Financial added 87 cents to $59.74, but Countrywide Financial fell 18 cents to $20.11.
In the tech sector, chip stocks slid amid unease over pricing competition. Micron Technology dropped $1.05, or 8.9%, to $10.74 after reporting a third straight quarterly loss.
Intel fell 57 cents, or 2.2%, to $25.81 and was one of the biggest decliners among the 30 stocks in the Dow index. Morgan Stanley said chip price cuts might drag down Intel’s near-term earnings.
But Shipp said he was optimistic that third-quarter earnings in general would meet tempered expectations, saying, “Earnings season is coming up and forecasts have been ratcheted down to very beatable levels.”
Among the day’s market highlights:
* Energy stocks were broady lower as oil prices fell for a fourth session. Near-term futures eased 11 cents to $79.94 a barrel in New York after the government reported an unexpected increase in crude oil inventories.
Chevron slid $1.08 to $91.48, Transocean dropped $1.39 to $111.35 and ConocoPhillips sank $1.41 to $84.06.
* Wynn Resorts plunged $16.43 to $149.40 and Las Vegas Sands slumped $17.03 to $127.53 on worries about profit prospects at their Macao casinos. Morgan Stanley said preliminary September gaming revenue for Macao indicated growth of 55% from a year earlier, below expectations.
Also in the casino sector, MGM Grand lost $3.20 to $91.70.
* Guitar Center jumped $2.21 to $61.22 on optimism that private equity firms led by Bain Capital Partners were on track to complete their buyout of the Westlake Village-based retailer. The deal, announced in June, is for $63 a share.
* In commodities trading, gold slipped 50 cents to $729.30 an ounce, extending a sharp decline Tuesday. Gold fell as the dollar continued to strengthen. The euro fell to $1.411 from $1.415.
