Updated from 4:13 p.m. EDT
Wall Street kicked off the week on the wrong foot, with most stocks finishing the session in the red. Investors remained skeptical of future earnings and kept their wallets closed today, forgoing the hype that surrounded one drug giant's quarterly report and some hot telecom merger news.
Dow Jones Industrial Average closed down 46.67, or 0.4%, to 10,686.89. The broader
S&P 500 skidded 15.67, or 1%, to 1464.52. The
Nasdaq Composite Index ended off 113.28, or 2.7%, to 3981.17.
was down 8.89, or 1.7%, to 513.81.
Going into this morning's open, the stock market had all the makings of a solid rally. There was the announcement that Germany's
finalized its $50 billion cash and stock offer for U.S. wireless firm
. There was also a report in
The Wall Street Journal
is well into talks to sell its optical-parts unit to
in a deal that could be valued at over $100 billion.
Scott Moritz covered the Nortel/Corning
story earlier today.
But despite all those positives, and a preopen rally in the futures market, stocks have struggled all day. It's troubling -- when stocks can't rally on good news, market participants begin to worry that all the good news is priced into the market, making it vulnerable to a fall.
"There's a concern we're seeing momentum flag," said Jeff deGraaf, senior technical analyst at
. "It's going to be pretty sloppy unless leadership can reestablish itself."
Still, Lehman's technical analysts are constructive on the market. "We don't think there is a lot of risk," allowed deGraaf. "Our sense is that we meander higher."
Meandering was certainly the
word of the day.
TheStreet.com Internet Sector
index closed down 45.03, or 5.4%, to 783.69 on its first day of trading with 24 components instead of 20.
last week ran a
story previewing the change, and our
FAQ on the DOT offers more background information.
TI Beats the Street
After the close,
beat analysts' estimates by one cent by reporting second-quarter earnings of 31 cents. The 25-analyst estimate was for a 30-cent gain, according to
First Call/Thomson Financial
Ahead of its earnings, the semiconductor manufacturer's shares were little changed, at 63 1/2.
Big Week for Data
Stocks may have some trouble going significantly higher this week, ahead of a couple of key economic reports at the end of the week. Thursday brings the second-quarter
Employment Cost Index
, the key measure of wage inflation said to be one of
Alan Greenspan's favorite bits of economic data. And on Friday, we have second-quarter
Gross Domestic Product
If either number comes in too hot, the sense that the economy is beginning to slow and that the Fed won't be raising rates anytime soon may get challenged. Though it might take some pretty strong data to convince some market participants that an economic soft landing is anything but a
"I'm becoming more optimistic, not less optimistic," said Hugh Johnson, chief investment officer at
. "The reason I believe the slowdown is for real is that that's been the message of the stock and bond markets. The stock market has been trendless, bond prices have gone up, the yield curve has flattened and investors have bought those segments of the stock market that they believe will do well when the economy slows."
'Bear'ing Up Well
Shares of investment bank and brokerage firm
surged today in the wake of a research report by a
Salomon Smith Barney
analyst who said that Bear Stearns "acknowledges it would consider acquisition offers."
The report, dated Friday, written by Guy Moszkowski of Salomon, said he met with Bear Stearns' CEO James Cayne, who "made it quite clear that an acquisition is not out of the question" and that a buyer "would have to be willing to pay at least four times book value, or nearly $120 per share today." Moszkowski pointed out that he didn't "believe any particular deal is on the near-term horizon, and Cayne noted that, to date, most talks have ended relatively quickly." Bear Stearns lifted 7.6%.
American Stock Exchange Broker/Dealer Index
ended fractionally higher, up 0.7%.
And speaking of financials,
, after hitting an intra-day trading high of 59 3/4, slipped almost 4% after posting second-quarter earnings of 54 cents a share, a penny better than the 16-analyst estimate and up from the year-ago 47-cent profit.
covered the earnings in a
story this afternoon.
Money center banks, which got a boost from buyers during last week's rally, couldn't sustain the pop Friday and were showing weakness today. "We're seeing some selling across the board in the money centers," said Patrick Boyle, director of trading at
Credit Suisse First Boston
. "With the strength on Thursday, people were looking for follow-through on Friday
and didn't receive it." Boyle noted
, which finished off fractionally and
Chase Manhattan Bank
, which lost 2.%.
With the price of crude oil declining, oil stocks continued were slumping. The
American Stock Exchange Oil and Gas Index
were both trading lower ahead of their second-quarter earnings reports which are due today.
The oil sector's losses were spilling over into the oil services sector, with the
Philadelphia Stock Exchange Oil Services Index
fell 4.3% and
Breadth was negative on moderately light volume.
New York Stock Exchange: 1,104 advancers, 1,746 decliners, 873 million shares. 54 new 52-week highs, 35 new lows.
Nasdaq Stock Market: 1,386 advancers, 2,658 decliners, 1.435 billion shares. 54 new highs, 104 new lows.
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Most Active Stocks
NYSE Most Actives
- Lucent (LU) : 26.7 million shares.
AT&T (T) : 17.8 million shares.
Pfizer (PFE) : 14.8 million shares.
Nasdaq Most Actives
- JDS Uniphase (JDSU) : 63.3 million shares.
Dell (DELL) : 40.3 million shares.
Cisco (CSCO) : 28.7 million shares.
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Crude oil's price decline put the airlines and transports back in flight. The
American Stock Exchange Airline Index
lifted 1.46, or 0.8%, to 171.03, with gains from
Dow Jones Transportation Average
bounced 11.67, or 0.4%, to 2820.09.
A good earnings report from
acted as a salve for an ailing drug sector. Merck earned 73 cents per share in the second quarter, 4 cents ahead of
First Call/Thomson Financial's
consensus estimate. Merck tacked on 8.8%. The
American Stock Exchange Drug Index
was up 2.6%.
Among other pharmaceutical companies,
was higher 3.3%,
Johnson & Johnson
was up 2.3%, Pfizer mounted 3.6% and
American Home Products
Semiconductor stocks, a leadership group that has lately come under some serious pressure, were mixed today. Despite earlier session gains,
finished off 0.6%.
PC makers were among the poorest performers, after two market research firms said that PC sales have slowed, particularly in the United States.
said that U.S. sales were up just 12% from the year-ago quarter, compared with worldwide growth of 18%.
International Data Corp.
said U.S. unit-shipments grew at 7%.
fell 4.1% and
traded 4% lower. The
Philadelphia Stock Exchange Computer Box Maker Index
was down 4%.
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Treasuries are surrendering some of last week's big gains on light volume and little news. Greenspan is slated to repeat last week's
Humphrey-Hawkins testimony for the House Banking Committee tomorrow, but apart from that, the bond market has little to focus on before Thursday. That day brings key economic data in the shape of the second-quarter
Employment Cost Index
and the June
durable goods orders
The benchmark 10-year Treasury note lately was down 7/32 to 103 12/32, lifting its yield to 6.031%.
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European markets put in a mixed day.
finished up 2.9 to 6381.3 in thin trading.
Across the channel, Frankfurt's
was down in late trading, as sharp falls in blue-chips Deutsche Telekom, retailer Metro and HypoVereinsbank weighed against strong rises in
. The index was recently 44.8, or 0.6% lower, at 7328.46.
closed up 38.45, or 0.6%, to 6502.57.
The euro was lately trading fairly flat at $0.9315.
Asian markets slumped overnight on the Nasdaq's losses Friday and weakness in domestic techs and telecoms.
In Tokyo, expectations of weak earnings from key electronics makers, which will start to release numbers this week, sent key Japanese stock indices lower today. The
index lost 264.37, or 1.6%, to stand at 16,547.12,
The greenback eased slightly against the yen in lethargic Tokyo trading to 108.77. The dollar was recently trading at 108.92 yen.
index plunged 261.17, or 1.5%, to 17,659.69 on weakness in telecom shares, lead by index heavyweight
slid 1.50, or 1.2%, to 122.00 despite the news that Deutsche Telekom had completed its deal to buy U.S. VoiceStream Wireless. Hutchison owns a 23% stake in VoiceStream.
Korean stocks were the biggest losers in Asia, with the key
index sliding 45.17, or 5.8%, to 737.89. A tumble in semiconductor shares triggered the downfall, with
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