Stocks End Mostly Lower in Slow Session
Updated from 4:12 p.m. EDT
Stocks retreated in a slow session Monday as valuation jitters trumped a slew of positive research on the technology sector and some decent economic data.
The
Dow Jones Industrial Average
shed 31 points, or 0.3%, to 9317. The
Nasdaq
lost 1 point, or 0.1%, to 1764, while the
S&P 500
rose less than a point, or 0.1%, to almost 994.
"People are asking themselves whether we've maxed out, so traders are taking gains off the table," said Robert Pavlik, portfolio manager at Oaktree Asset Management. "Next week, once everyone returns from vacation, we'll see a different type of market, with investors looking for value, trying to participate."
The day's only economic report showed existing-home sales rose to an annualized pace of 6.12 million in July, from 5.83 million the previous month. That was the third increase in the last four months and came in ahead of economists' estimates of 5.90 million.
Treasuries dropped following the report, with the 10-year note ending down 15/32 in price to yield 4.25%. Crude oil prices for future delivery rose in London. The dollar was weaker against the yen and the euro.
Following
Intel's
(INTC)
TheStreet Recommends
raised revenue guidance last Friday, a flurry of analysts increased their price target on the stock, including Bear Stearns, First Albany, Fulcrum and Prudential. Intel nevertheless lost 19 cents, or 0.7%, to $27.19.
Also in the chip arena, SoundView said Intel's preannouncement is evidence of a revival in the semiconductor sector, prompting it to upgrade
Advanced Micro
(AMD)
and raise its targets on a number of semiconductor stocks, including
Texas Instruments
(TXN)
,
Xilinx
(XLNX)
and
Applied Materials
(AMAT)
.
Wireless stocks were lower, with
Sprint PCS
(PCS)
losing 24 cents, or 4.7%, to $4.92 after the mobile-phone company was cut to market perform from outperform at Wachovia Securities.
J.P. Morgan also weighed in on tech, saying it expects personal computer unit volume to rise 8% or 9% this year, up from its previous estimate of 7%. The brokerage warned, however, that pricing pressure will keep a lid on revenue.
McData
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beat analysts' second-quarter earnings estimates, but its stock tumbled after the networking company offered a cautious outlook for the third quarter. Shares of McData fell $2.28, or 18%, to $10.38.
"Investors are looking forward, focusing on the fact that September is a weak month, but I don't really believe anything negative will happen," said John Hughes, market analyst at Shields & Co. "Overall, we have a very good technical configuration in terms of advancers and decliners, new highs, so even if we do get a pullback, it will be short-lived."
Volume slowed to a trickle at the
NYSE
, with slightly less than 1 billion shares trading hands, and decliners ahead of advancers by a 3-to-2 margin. At the Nasdaq, 1.1 billion shares were exchanged, and losers were ahead of winners by a margin of more than 3 to 2.
Among the Dow components contributing to the decline was
Caterpillar
(CAT)
after analysts at Legg Mason downgraded the stock to hold from buy on valuation concerns. The stock shed $2.01, or 2.8%, to $69.68, after coming close to the firm's $73 target.
Alcoa
(AA)
was also lower on a research note from Prudential, which downgraded the stock to hold from buy as the share neared the firm's $30 price target. Analysts cited doubts about the recovery in aerospace, telecom and power generation sectors, which include some of the aluminum maker's customers. Alcoa shares lost 38 cents, or 1.4%, to $27.75.
Another downgrade went to
FleetBoston
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, as Prudential lowered its rating on the financial firm to sell from hold on worries of weak revenue. Shares fell 53 cents, or 1.8%, to $29.40.
Elsewhere,
Lucent
(LU)
said it's under investigation by the Justice Department and the
Securities and Exchange Commission
amid allegations that it bribed officials in Saudi Arabia to secure a telecommunications-equipment contract. Lucent shares were flat at $1.82.
Wal-Mart
(WMT)
tried to give the market a boost, raising its August same-store sales growth estimate to a range of 4% to 6%, from 3% to 5% previously. The world's largest retailer said its stores are seeing both higher traffic and higher average purchases this month. Shares gained 54 cents, or 0.9%, to $58.94.
Overseas markets were mixed. London's stock market was closed for a holiday. Germany's Xetra DAX was down 43 points, or 1.2%, at 3505. In Asia, Japan's Nikkei was fractionally lower at 10,277, while Hong Kong's Hang Seng was also little changed at 10,764.
On Friday, the Dow closed down 74 points, or 0.8%, at 9348, while the Nasdaq finished lower by 12 points, or 0.7%, at 1765. The S&P 500 shed 10 points, or 1%, to 993.
