NEW YORK >> Wall Street took a respite today after two weeks of volatile trading, dipping lower as investors absorbed an unsurprising purchasing managers' report and awaited a Federal Reserve meeting on interest rates. Stocks fall as manufacturing
stays weakStar-Bulletin news services
Analysts attributed the muted reaction to investors' acceptance that the economy will stay weak for a while, as well as their hesitance to make any big moves until more is known about the U.S. response to the Sept. 11 terrorist attacks.
The Dow Jones industrial average closed down 10.73 at 8,836.83, losing some ground from Friday's 166-point gain and the index's 611-point rebound last week. The Standard & Poor's 500 index dropped 2.39 to 1,038.55, and the Nasdaq composite index lost 18.35, closing at 1,480.45.
Decliners led advancers 3 to 2 on the New York Stock Exchange, with 1,860 down, 1,300 up and 174 unchanged. Volume was 1.16 billion shares vs. 1.64 billion Friday. The NYSE composite index lost 1.79 to 542.05, the American Stock Exchange composite index rose 0.63 to 809.40 and the Russell 2000 index fell 7.27 to 397.60.
The Treasury's 2-year note rose 3/32 to 99 - 29/32; its yield fell 6 basis points to 2.79 percent. The 10-year note gained 12/32 to 103 - 20/32; its yield fell 5 basis points to 4.54 percent. The 30-year bond rose 21/32 to 100; its yield fell 4 basis points to 5.38 percent.
"What the market is reacting to is a growing sense that this is going to be a long haul. The terrorism campaign will take a long time and our lives are going to be altered to a great degree and not in a way that is bullish," said Charles Pradilla, chief investment strategist at SG Cowen Securities.
Investors showed little alarm early in the session at new National Association of Purchasing Management data showing manufacturing activity continues to suffer.
Although the NAPM found that the manufacturing sector contracted in September for the 14th consecutive month, the results were slightly better than expected. The NAPM index reading of 47 was above the 45 most analysts had predicted, but it still fell below 50 -- the level considered an indication that manufacturing activity is shrinking, rather than growing.
"If economic data is more or less in the consensus, as this was, it's not going to affect the market significantly," Pradilla, the SG Cowen strategist, said.
Tech stocks recorded the most notable losses today, reflecting investors' ongoing doubts that the already fragile sector will recover anytime soon. Hewlett-Packard fell 45 cents to $15.60, while Intel dropped 44 cents to $19.95.
Blue chips were more mixed. ExxonMobil declined 31 cents to $39.09, while manufacturer 3M dropped $1.54 to $96.86.
Financial stocks fared better, including Citigroup, which rose $1.25 to $41.75.
After the market closed, Compaq Computer, which is being acquired by rival Hewlett-Packard Co. for $16.9 billion, said third-quarter sales fell short of forecasts, resulting in a loss for the period, as demand for personal computers declined. The loss on an operational basis was 5 cents to 7 cents a share, compared with a previous forecast for profit of 7 cents to 9 cents, the Houston-based company said in a statement. Sales were $7.4 billion to $7.5 billion, less than the $8 billion to $8.4 billion Compaq had estimated. The second-biggest PC maker said it will take a charge of about $500 million to cover a drop in the value of its investments, primarily in Internet-venture firm CMGI Inc., whose stock has plunged 97 percent in the past year. Compaq shares rose 2 cents to $8.33 in regular trading before the announcement. The shares are off 70 percent in the past year.
Meanwhile, some of today's losses were expected given how turbulent trading has been recently. Stocks plunged when trading resumed after the attacks, but even before then, the market was falling on worries that a business turnaround might not occur before 2002. Although stocks rebounded last week, they were expected to continue to be weak as investors took profits and shied away from any big commitments. Third-quarter earnings reports, due this month, are expected to add to the volatility. Even the possibility of the ninth interest rate cut of the year at tomorrow's Federal Reserve meeting is expected to do little to cheer Wall Street. Instead, investors are more likely to focus on what the Fed says about the economy's current health and future prospects.
Also today, the Commerce Department reported consumer spending increased by 0.2 percent in August, slightly below analyst expectations.