Posted at 10:55 a.m., Monday, August 6, 2001
Market pulls back on pessmistic Intel news
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Associated Press
NEW YORK — Sullen investors sent stocks lower today, forcing the Dow Jones industrials down more than 100 points as Wall Street retreated from last week's optimism about the semiconductor industry.
Uncertainty about the economy and earnings ruled the market after Salomon Smith Barney reduced profit and revenue targets for Intel and Lehman Brothers said the chip maker will cut prices in half on its Pentium 4 processor. The news disturbed investors who last week bid chip stocks higher on bullish comments from other analysts and Intel itself.
"Whenever we think we can go back in and play again, something like this happens," lamented Charles Pradilla, chief investment strategist for SG Cowen Securities.
The Dow Jones industrial average finished the session down 111.47 at 10,401.31, according to preliminary calculations. One of the Dow's biggest losers was Intel, which ended down $1.40 at $30.28.
The market's broader indicators also declined. The Nasdaq composite index fell 32.07 to 2,034.26, and the Standard & Poor's 500 index declined 13.87 at 1,200.48.
Stock prices had been expected to trend higher this month as investors got a respite following the dismal second-quarter earnings results most companies released in July. Instead, Wall Street has been stymied as few companies can say they expect business to improve and virtually none can prove that it already has picked up.
"There is just no indication that this market will turn on a dime," said Alan Ackerman, executive vice president of Fahnestock & Co.
Chip makers tugged the tech sector down with Intel's chief competitor, Advanced Micro Devices, falling $1.63 to $17.62 and Vitesse Semiconductor declining 45 cents to $21.26. The wavering sentiments on the semiconductor industry illustrate the uneasiness that is pervasive on Wall Street.
"It shows how much tentativeness and uncertainty there is out there," Ackerman said. "Investors are in no hurry to buy."
Other tech losers included Dow industrial IBM, down $1.67 at $106.51, and Cisco Systems, which slipped 51 cents to $19.54 and is scheduled to release its fiscal fourth-quarter earnings on Tuesday.
Blue chip losses were widespread. The biggest decliners included retailers, expected to issue poor July sales results on Thursday.
Radio Shack, which said Monday that July sales slipped 6 percent over last year and was downgraded by Merrill Lynch, tumbled $2.45 to $26.46. Best Buy, another electronics retailer, also suffered, falling $2.68 to $64.75.
Investors were disturbed by the prospect of weak store sales because that indicates the economy, two-thirds of which depends on consumer spending, continues to slump. Even discounters, considered one of the retailing sector's safer bets, traded lower. Wal-Mart fell 879 cents to $54.50.
Other sizable blue chip losses came from 3M, which fell $2.36 to $109.37, and General Electric, which stumbled $1.36 to $41.39.
Gainers tended to be driven by company-specific news. US Airways rose $1.19 to $18.07 after Global Airlines said it will offer $1.8 billion to acquire it. Global is the New York holding firm that tried in vain earlier this year to buy Trans World Airlines.
Declining issues outnumbered advancers 3 to 2 on the New York Stock Exchange. Volume came to 809.51 million shares, down from the 929.63 million shares traded on Friday.
The Russell 2000 index, which measures the performance of smaller company stocks, fell 6.19 to 480.96.
Overseas markets were mixed today. Japan's Nikkei stock average finished the day off essentially unchanged. France's CAC-40 advanced 0.7 percent, Britain's FT-SE 100 fell 0.4 percent, and Germany's DAX index inched up 0.2 percent.
