Stocks slip as markets await earnings reports
NEW YORK » Wall Street finished a quiet session mostly lower yesterday, as investors cashed in some gains from last week's rally and readied for quarterly earnings reports.
The Treasury bond market was closed for the Columbus Day holiday and there was no major economic news to guide investors, so Wall Street remained cautious ahead of the flood of third-quarter results.
"There's room for a rally if third-quarter earnings come in stronger than expected, but they do want to see that the fourth quarter is going to be strong as well," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research.
The Dow fell 22.28, or 0.16 percent, to 14,043.73. Broader stock indexes were mixed. The Standard & Poor's 500 index fell 5.01, or 0.32 percent, to 1,552.58, while the Nasdaq composite index rose 7.05, or 0.25 percent, to 2,787.37.
Trading volumes were low, with many investors on the sidelines for the holiday. Declining issues outnumbered advancers by nearly 2 to 1 on the New York Stock Exchange, where volume came to 850.5 million shares.
Trading was also light because the market is waiting for tomorrow's release of minutes from the Federal Reserve's Sept. 18 meeting, when policy makers lowered interest rates by a half-point. Wall Street hopes the minutes reveal hints that more rate cuts are in store, which could loosen the credit markets and fuel spending.
The tech-heavy Nasdaq got a boost from Google Inc., which surpassed $600 for the first time and extended a monthlong rally after upbeat projections about third-quarter earnings. The company's initial public offering price was $85 in August 2004, and shares yesterday rose $15.57, or 2.6 percent, to $609.62.
The Nasdaq was also lifted by Business Objects SA, a French company with U.S.-traded shares that rose $7.56, or 15 percent, to $57.83. German software company SAP AG said late Sunday it would pay $6.79 billion for Business Objects SA. SAP fell $2.87, or 4.9 percent, to $56.36.
SAP's bid for Business Objects preceded a $1.1 billion bid today from conglomerate Textron Inc. for United Industrial Corp. Textron fell $1.37, or 2.1 percent, to $64.01, and United Industrial rose $4.77, or 6.3 percent, to $80.39.
"We find it encouraging that there were two major buyouts this morning. It shows that the credit markets are firming up and companies are coming back into play," Detrick said.
Bob Doll at BlackRock Inc. pointed out that jobs growth is still at its lowest level in years.
"With the U.S. economy continuing to grow at a relatively slow pace, the main risk to equities appears to be the earnings backdrop," Doll wrote.
Many analysts are predicting third-quarter percentage growth to be in the low-to-mid single digits, but the S&P forecasts a modest decline in total earnings per share for S&P 500 companies. S&P, along with many other market watchers, anticipates double-digit percentage growth in the fourth quarter.
Light, sweet crude tumbled fell $2.20 to $79.02 per barrel on the New York Mercantile Exchange. Gold fell as the dollar rose against major rival currencies.