- NEW YORK (Reuters) - Stocks
ended lower on Tuesday after a report fanned fears consumers will snap
their wallets shut and stifle an economic upturn, while a dull outlook
from Intel Corp. INTC.O spurred selling in the tech sector.
-
- "You've got a couple of things that don't bode very
well as far as the consumer spending money on personal computers and consumer
electronics," said Tom Schrader, head of listed trading at Legg Mason
Wood Walker. "If the broad opinion is that the consumer has been tapped
out ... that doesn't bode well for the economy."
-
- The market was whipsawed through the morning by a mixed
bag of economic data, first drawing some comfort from a strong July durable
goods report and then slapped lower by news that U.S. consumer confidence
plunged to a 9-month low in August.
-
- "A dreary consumer raises the possibility that they
don't spend the money, they just save it," said Henry Herrmann, chief
investment officer at Waddell & Reed.
-
- Investors worry that sluggishness in consumer spending,
the main engine behind U.S. growth, could hinder a recovery and crimp corporate
profits. Reports of sagging U.S. chain store sales and a slew of downgrades
on retailing stocks by Merrill Lynch also slammed the retail sector.
-
- Computer-related shares weighed down the blue-chip Dow
Jones industrial average .DJI , which sagged 94.6 points, or 1.06 percent,
to 8,824.41, according to the latest available data.
-
- The broad Standard & Poor's .SPX fell 13.13 points,
or 1.39 percent, to 934.82, and the tech-laced Nasdaq Composite .IXIC dropped
43.96 points, or 3.16 percent, to 1,347.78.
-
- Trading volumes were modest, however, and traders cautioned
against drawing conclusions about the market's choppy action in a week
when many investors are away enjoying summer holidays.
-
- About 1.2 billion shares were traded on the New York
Stock Exchange, while 1.4 billion were traded on Nasdaq.
-
- "We're seeing a violent reaction to news,"
said George Rodriguez, head of trading at investment firm Guzman &
Co., adding that low liquidity makes the market prone to sharp swings.
"People are just not in the office."
-
- Intel weighed on both the Nasdaq and the Dow. Shares
of Intel fell 95 cents, or 5 percent, to $17.18. The world's No. 1 chipmaker
said it expected modest growth in third-quarter earnings over the preceding
quarter and noted it has not seen much improvement in the computing environment
because companies are not investing.
-
- The news dragged on rivals such as Advanced Micro Devices
AMD.N , down 63 cents at $9.09, or 6 percent. The Philadelphia semiconductor
index .SOXX fell nearly 6 percent to its lowest level in about two weeks.
-
- Economic reports buffeted the market. There was an early
boost after U.S. July durable goods orders posted their largest increase
in nine months, boosted by record gains in orders for machinery and non-defense
capital goods and by the biggest rise in transportation orders since October,
the government said.
-
- Later, however, the Conference Board, a business-backed
research group, said its overall index of consumer attitudes fell to 93.5
in August -- its lowest level since November 2001 -- from 97.4 in July
and below analysts' expectations of a reading of 97.
-
- Semiconductor equipment makers also took a hit. Applied
Materials AMAT.O , sagged $1.03, or 7 percent, to $13.93, while the S&P
semiconductor equipment index .GSPTKSM dropped more than 6 percent.
-
- Among computer firms, Hewlett-Packard Co. HPQ.N fell
64 cents, or 4 percent, to $14.21. After the close, the No. 2 computer
maker reported a profit in its first quarter after acquiring Compaq Computer
Corp. but said the economy was still weak.
-
- Merrill Lynch cut its ratings on eight retailers, saying
consumers are being more conservative than anticipated. These included
Talbots Inc. TLB.N , Williams-Sonoma WSM.N and Coach Inc. COH.N . Talbots
lost $1.69 to $32.06, Williams-Sonoma was off $2.31 at $22.65 and Coach
lost 39 cents to $26.52. The S&P retail index .RLX fell nearly 2 percent.
-
- Target Corp. TGT.N , also lowered by Merrill, fell 79
cents to $35, or more than 2 percent. The No. 3 U.S. discount chain late
on Monday said sales at its stores open at least a year fell below plan
again last week, hurt by continued weak purchases of men's items and jewelry
and accessories.
-
- The day's biggest percentage loser and also the New York
Stock Exchange's most actively traded stock was HealthSouth Corp. HRC.N
, which on Tuesday announced plans to split in two to shield its strong
surgery center division from expected earnings weakness in its rehabilitation
services.
-
- HealthSouth's shares slumped $5.28, or 44 percent, to
$6.69.
-
- In other notable news, Citigroup Inc. C.N said late on
Monday its investment banking arm Salomon Smith Barney allocated thousands
of shares in initial public offerings to top unnamed officials at now-bankrupt
WorldCom Inc. WCOEQ.PK , though it defended the practice as an industry
norm.
-
- Citigroup, a Dow stock, fell 20 cents to $34.20.
-
- Enron Corp. ENRNQ.PK will not have enough assets left
to be reborn as a restructured company if it sells all of the 12 major
assets it put on the block Tuesday, Enron sources said.
-
- One bright spot was Boeing Co. BA.N , the world's largest
airplane maker, which rose 14 cents to $37.03. Boeing said on Tuesday it
had boosted the signing bonus and pension proposals in what it had termed
its final contract offer to 26,000 unionized machinists.
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