Updated from 4:02 p.m. EDT
Stocks tumbled in extremely thin volume Monday, as the start of the Republican National Convention, mixed economic news and concern about this week's employment numbers overshadowed a 2% decline in the price of oil.
After rising more than 6% since mid-August, the
closed down almost 25.60 points, or 1.37%, to 1836.49. The
Dow Jones Industrial Average
fell 72.49 points, or 0.71%, to 10,122.52, while the
fell 8.62 points, or 0.78%, to 1099.15, as selling picked up in the final minutes of trading. The 10-year Treasury note was up 12/32 to yield 4.18%, while the dollar was higher against the yen and lower against the euro.
For the third straight session, volume on both the
New York Stock Exchange
and Nasdaq set a year low. Roughly 784 million shares changed hands on the Big Board, while 943 shares traded on the Nasdaq. Advancers trailed decliners by roughly 4 to 6 at the NYSE and by 3 to 7 at the Nasdaq.
"You're getting some normal hesitancy the same way we did before the Democratic National Convention and the Olympics," said Al Goldman, chief market strategist at A.G. Edwards. "Plus, we were due."
"We had a good week last week on modest volume because of the end of summer and the upcoming Labor Day weekend, so it's very normal action," Goldman added. "I think stocks are actually holding together pretty well."
Longer-term, Goldman is bullish.
"We'd be 65% in equities right now. We think the market is somewhat undervalued due to the risk premium, and until recently the run-up in the price of oil," said Goldman. "So as we survive the third of the big events, the Republican National Convention, as we did the Olympics and as we did the DNC, I think the risk premium will start coming out a little."
In New York, Nymex crude for October delivery closed 96 cents, or 2%, lower at $42.22, a four-week low, after erasing an early gain after Friday's higher close. The contract is 9% below the peak reached more than a week ago, a decline that helped the Dow gain 0.8% and the Nasdaq Composite add 1.3% over the previous five sessions.
On the economic front, the Commerce Department announced that personal income grew only 0.1% in the month of August, down from 0.2% in the prior month. Analysts had expected personal income to grow at 0.5%. Personal spending increased 0.8% ahead of analysts' estimates of 0.7%; last month's decrease of 0.7% was revised to a decline of just 0.2%.
"I think what you have here is the last week of summer," said John Hughes, an equity strategist at Shields & Co. "I don't expect much to happen over the next few days. I think it's going to be a lot like last week and the week before with this lackluster trading.
"A lot of these concerns we've had, whether it is the convention, terrorist activities, the price of crude oil, whatever it is you want to focus on -- I think we're going to start to get past all that stuff and start to focus on the basics, like earnings and things like that," he added. "GDP growth is still pretty good, the economy is clicking along -- maybe not at the same rate, but things look OK. And I wouldn't be surprised if we set ourselves up or are in the process of setting ourselves up for a decent fourth-quarter rally."
On Sunday, at least 100,000 protesters marched in Manhattan to protest Bush administration policies, an outpouring that is expected to be repeated on a smaller scale all four nights of the gathering. Police made about 200 arrests but said the demonstration was mostly peaceful.
Trading this week occurs in the shadow of Friday's report on the August employment picture. Economists are expecting nonfarm payrolls to increase by 150,000 following July's anemic 32,000-job increase. The unemployment rate is expected to remain steady at 5.5%.
On Thursday, investors will get a key reading on back-to-school computer demand when
delivers its midquarter update. Analysts are currently expecting the microprocessor giant to earn 30 cents a share on revenue of $8.88 billion in its September quarter.
Among corporate stories Monday,
fell after warning that 2005 earnings will miss estimates because of lowered reimbursement rates on a handful of drugs and lost business with
. The drug distributor, which reported an in-line fourth quarter, said 2005 earnings will be $1.45 to $1.53 a share, not the $1.88 to $1.93 a share it previously forecast.
The stock closed lower $5.91, or 21.26%, to $21.89.
Also, shares of
fell dramatically Monday when the company said it failed to file its fiscal 2004 annual report to the
Securities and Exchange Commission
. Amid questions of the company's viability, the share prices tumbled to finish down $3.34, or 42.35% to $4.56.
Overseas markets were mixed, with Germany's Xetra DAX closed down 0.32% to 3838.85. In Asia, Japan's Nikkei fell 0.2% overnight to 11,185, while Hong Kong's Hang Seng gained 0.5% to 12,878. London markets were closed for a national holiday