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Stocks Trip Ahead of Fed Gathering

TSC Staff

Stocks in the U.S. fell Monday as buyers sat on the sidelines ahead of the upcoming meeting of Federal Reserve policymakers a day from now.

The Dow Jones Industrial Average lost 42.17 points, or 0.4%, at 11,284.15, and the S&P 500 was off 11.30 points, or 0.9%, at 1249.01. The Nasdaq declined 25.40 points, or 1.1%, to 2285.56.

As is often the case, traders appeared unwilling to make big bets ahead of Tuesday's Fed meeting. While the Fed isn't expected to make any change to the overnight lending rate, investors will be anxious to learn what the central bank thinks about the state of the economy and whether another move could be near.

Earlier, the government issued a report on personal income and spending for June. Spending was up 0.6%, topping the 0.4% consensus, and income rose 0.1%, ahead of the expectation for a decline of 0.1%. The core personal consumption expenditures index was rose 0.3%, a bit warmer than had been anticipated.

The losses had been more pronounced, but a selloff in crude mitigated the pressure on stocks. Oil prices sank $3.69 to $121.41 a barrel despite word of a fire at a Valero (VLO Quote) refinery and a large storm in the Gulf of Mexico.

On the corporate side, Verizon (VZ Quote) and two unions have extended their deadline for reaching a labor agreement, delaying a planned strike that would have affected 65,000 workers. Verizon was down 0.5%.

Motorola (MOT Quote) named a former Qualcomm (QCOM Quote) executive as head of its mobile-device unit, a significant step in spinning off the handset division into a separate public company. Shares rose more than 11%.

Sanjay Jha, COO and President of CDMA Technologies with Qualcomm, will leave to become co-CEO of Motorola and chief of the company's mobile devices business. Motorola's current CEO, Greg Brown, will also serve as co-CEO and will head up the broadband mobility solutions division.

Among analyst actions, Amgen (AMGN Quote) was initiated as a buy at Bank of America, while Deere (DE Quote) was downgraded at Goldman Sachs to neutral from buy.

Nortel (NT Quote) was cut at Jefferies to hold from buy, and Morgan Stanley lifted its price target on Bank of America (BAC Quote) to $22 from $15.

The chip sector was in focus throughout the day after the Semiconductor Industry Association said global sales of semiconductors for the first half of the year rose to $127.5 billion, up 5.4% from the same period in 2007. The Philadelphia Semiconductor Sector index was better by 0.5%.

The United States Oil (USO Quote) ETF, which tracks the price of crude, slumped 3.5%.