- NEW YORK (Reuters) - Stocks
sagged in very thin trading on Friday ahead of the Labor Day holiday weekend
as technology stocks sank under the weight of a downbeat outlook from bellwether
Sun Microsystems SUNW.O .
-
- The broad market wrapped up the week on a sour note,
snapping a five-week winning streak in a soggy, pre-holiday week full of
gloomy forecasts from corporate America and downbeat comments from Wall
Street analysts.
-
- "There's a growing sense that technology is going
to take even longer to turn on the earnings front, so investors are shipping
money out of that group," said Owen Fitzpatrick, head of the U.S.
equity group at Deutsche Bank Private Banking.
-
- The market, particularly blue chips, got an early boost
from data showing expansion in manufacturing and stabilization of consumer
sentiment. These reports eased worries that the economy's rebound from
recession has stalled and could stunt corporate profits.
-
- Investors were quick to cash out after the market's strong
run in recent weeks, bracing for the possibility of more bad news on the
earnings front after having their hopes for improvement in corporate profits
dashed repeatedly.
-
- The blue-chip Dow Jones industrial average .DJI ended
with a loss of 7.49 points, or 0.09 percent, at 8,663.50, according to
the latest available data. The Dow had gained more than 1 percent during
the session, bolstered by industrials such as 3M Company MMM.N , up 30
cents at $124.95.
-
- The broad Standard & Poor's 500 index .SPX sagged
1.73 points, or 0.19 percent, to 916.07, while the Nasdaq Composite .IXIC
fell 20.86 points, or 1.56 percent, to 1,314.91 to finish near its low
of the day.
-
- For the week, the Dow fell 2.4 percent and the S&P
500 fell 2.6 percent, both after five straight weeks of gains. The Nasdaq
fell 4.8 percent. For August, the Dow fell 0.8 percent, the S&P 500
rose 0.5 percent, and the Nasdaq fell 1 percent.
-
- Volumes on the last trading day of the month were among
the thinnest of the year ahead of the long Labor Day weekend, with many
investors already on vacation and others heading out early. Wall Street
is shut on Monday for the holiday.
-
- "You could probably find more people that are typically
at their desks in the Hamptons right now than you could in New York,"
said Mark Donahoe, managing director of institutional sales trading at
U.S. Bancorp Piper Jaffray, referring to posh summer beach haven.
-
- Sun was down 14 cents at $3.69 and was the most actively
traded issue on Nasdaq. Sun Microsystems' chief financial officer lowered
the computer maker's revenue outlook for the September quarter and said
corporate spending on technology may be weakening.
-
- Other computer-related tech shares felt a pinch from
the Sun news. Web gear maker Cisco Systems CSCO.O was down 38 cents at
$13.82 and top chip maker Intel Corp. INTC.O off 47 cents at $16.67. Among
software companies, Microsoft Corp. MSFT.O was off $1.50 at $49.08 and
Oracle Corp. ORCL.O lost 37 cents at $9.59.
-
- "Tech's just not in good shape right now,"
Donohoe said. "You still have somewhat of a slowdown."
-
- Another warning came from BellSouth Corp. BLS.N , the
No. 3 U.S local telephone company, which said 2002 earnings will fall below
expectations due to a restructuring and weak sales in its wireless business
as well as the turbulent economy.
-
- Shares of BellSouth lost 93 cents, or 4 percent, to $23.32.
SBC Communications Inc. SBC.N , BellSouth's partner in the wireless joint
venture Cingular Wireless, saw its stock drop $1.06, or 4 percent, to $24.74.
-
- BellSouth's warning comes only five weeks after the company
last revised its outlook on July 22, "highlighting the speed at which
business conditions have apparently deteriorated," Merrill Lynch analyst
Adam Quinton said.
-
- Semiconductor equipment stocks were buffeted by a slew
of downgrades by Merrill Lynch, which cut its midterm ratings on chip gear
makers KLA-Tencor Corp. KLAC.O and Applied Materials Inc. AMAT.O , citing
Sun's dim forecast. It also cut its rating on Novellus Systems Inc. NVLS.O
.
-
- Reactions were mixed in the recently pummeled sector.
KLA-Tencor slipped 75 cents to $32.87, Applied Materials fell 8 cents to
$13.36 and Novellus rose 17 cents to $24.46.
-
- The S&P is still up about 15 percent since it slammed
down to a 5-year low on July 23. Investors have put aside some of their
jitters about corporate corruption and taken comfort in the Federal Reserve's
decision earlier this month to leave the door open to further interest
rate cuts.
-
- Stocks have stalled somewhat, however, as uninspiring
forecasts from companies including Intel and Nortel Networks NT.N and lingering
doubts about the strength of the economic rebound nags investors.
-
- Manufacturing in the Midwest expanded for the seventh
straight month in August, stepping up its pace from the prior month, according
to one report. Another report showed consumer sentiment dipped in August
but stabilized as the stock market rebounded for most of the month, even
as Americans fret about the economy's future path.
-
- After the open, the University of Michigan's final August
consumer sentiment index fell slightly to 87.6, down from 88.1 in July
and a mid-month reading of 87.9, market sources said on Friday. That was
below expectations for a rise to 88.3.
-
- On a more upbeat note, the National Association of Purchasing
Management-Chicago index rose to 54.9 in August from 51.5 in July. It was
the seventh consecutive reading above 50, which points to an expanding
regional manufacturing economy. A reading below 50 signals contraction.
-
- In the news, Major League Baseball players reached a
new labor agreement with team owners in 11th-hour talks, averting a strike
just ahead of the deadline, said Donald Fehr, chief of the players' union.
-
- Shares of Rawlings Sporting Goods Co. RAWL.O , whose
gloves, bats and balls are used by many players, rose 32 cents, or 6 percent
to $5.37 on the Nasdaq.
-
- Genelabs Technologies Inc. GNLB.O rose $1.43, or 103
percent, to $2.82. The drug developer said it received conditional U.S.
regulatory approval for a new drug to treat the degenerative disorder lupus,
but would need to conduct an additional clinical trial to gain clearance.
-
- UAL CORP. UAL.N fell 18 cents, or 6 percent, to $2.87.
UAL's United Airlines said it will seek $1.5 billion in annual cost reductions
from its labor unions as part of a plan to cut yearly costs by $2.5 billion
and avoid a bankruptcy filing.
|