Stocks drift lower after Johnson & Johnson report
Most stocks posted modest losses Tuesday after a major healthcare company’s quarterly sales fell short of expectations and an influential analyst made negative comments about a big bank.
The Dow Jones industrial average lost nearly 15 points. The Standard & Poor’s 500 index also fell, but the Nasdaq composite index edged higher. On Monday, the Dow and the S&P; 500 rose modestly to their highest closes of the year while the Nasdaq inched down.
Stocks could get a bounce today after Intel posted results late Tuesday that topped expectations and said its business was improving. The chip giant’s stock jumped as much as 5% in after-hours trading.
The market could also get a lift from comments by Michael J. Ward, chief executive of rail operator CSX, who said the worst of the recession “is likely behind us.” And the first third-quarter report from a major bank is expected early today with a release from JPMorgan Chase.
Johnson & Johnson was the first in a series of big companies to report quarterly results this week, and a 5% drop in sales at the maker of healthcare products heightened concerns that companies have continued to rely on cost-cutting to boost profits, as they did in the first half of the year. Investors are worried that earnings will suffer if sales don’t improve.
Healthcare stocks stumbled after Johnson & Johnson released its results and the Senate Finance Committee approved a version of the healthcare overhaul bill. Shares of J&J; slipped 2.4%.
The market’s unease worsened after banking analyst Meredith Whitney lowered her rating on shares of Goldman Sachs Group to “neutral” from “buy.” The stock had risen 34% since Whitney upgraded the stock to “buy” in mid-July. Goldman reports its results Thursday. Its shares fell 1.5%.
Technology stocks rose on news that networking-equipment maker Cisco Systems had agreed to buy Starent Networks for $2.9 billion.
The Dow fell 14.74 points, or 0.2%, to 9,871.06. On Monday, it came within 69 points of 10,000, a level not seen in a year.
The S&P; 500 index fell 3 points, or 0.3%, to 1,073.19, its first loss after six days of gains. The Nasdaq rose 0.75 of a point to 2,139.89. The Russell 2,000 index of smaller companies fell 0.3%.
Three stocks fell for every two that rose on the New York Stock Exchange.
An index of the dollar’s value against other major currencies fell to a 14-month low.
Near-term gold futures rose $7.50 to $1,064.20 an ounce, a fresh closing high. Oil climbed 88 cents to settle at $74.15 a barrel in New York trading.
Yields on Treasury bonds fell after surging last week. The benchmark 10-year Treasury note dropped to 3.31% from 3.38% late Friday. U.S. bond markets were closed Monday for Columbus Day.
Overseas, key stock indexes fell 1.1% in Britain and 1.2% in Germany and France. Shares rose 0.6% in Japan.
