NEW YORK >> A downgrade in the semiconductor sector capped a troubling week on Wall Street today, sending stocks sharply lower ahead of the Memorial Day holiday weekend. Stocks pull back
ahead of holidayBy Lisa Singhania
Associated PressIt was the slowest trading day on the New York Stock Exchange this year, with declining issues narrowly leading advancers 3 to 2 as 880.57 million shares traded, compared with 1.18 billion shares yesterday.
The sluggishness reflected the start of vacation for many traders as well as continuing anxiety about possible terror attacks. The lack of activity made prices more susceptible to big swings, since low volume can exaggerate gains or losses.
The Dow Jones industrial average closed down 111.82, or 1.1 percent, at 10,104.26, after two days of moderate late-session gains.
The biggest losses came in the technology sector, sending the tech-focused Nasdaq composite index down 36.14, or 2.1 percent, to 1,661.49. The Standard & Poor's 500 index fell 13.26, or 1.2 percent, at 1,083.82. And the Russell 2000 index fell 7.60 to 493.64.
Bond prices were nearly unchanged in a quiet, abbreviated session. The price of the benchmark 10-year Treasury note fell 1/32 point, its yield rose to 5.16 percent compared with 5.15 percent late yesterday. The 2-year note was unchanged, yielding 3.22 percent.
"A lot of people have left early for the holiday, so it's affecting volume," said Stephen Massocca, president of Pacific Growth Equities. "People are also nervous there might be some terrorist attack over the holiday weekend and that's affecting trading."
Applied Materials tumbled $1.77, or 6.9 percent, to $23.80 after Goldman Sachs cut its rating on the stock, noting that the demand forecast for semiconductor stocks remains uncertain. Applied Materials makes equipment used in the production of semiconductors.
"On light trading volume like we're seeing today, a downgrade like this can drive the direction for the market," said Brian Bruce, director of global investments, PanAgora Asset Management.
Home builders benefited from a Commerce Department report showing new home sales rose 1 percent last month, helped by low mortgage rates. Pulte Homes gained $2.13 to $55.48.
Investors also bid Biogen higher on news a Food and Drug Administration advisory panel has recommended approval of the biotechnology company's psoriasis drug Amevive. Biogen soared $9.15, or 22.7 percent, to $49.47.
And UAL rose 32 cents to $12.07 after J.P. Morgan initiated coverage of the stock at a "buy" rating and said the airline was its top pick.
Also Friday, the Commerce Department said the economy as measured by the gross domestic product grew at a 5.6 percent annual rate in the first three months of 2002, a little less than the 5.8 percent rate estimated a month ago.
The figure still represents the strongest performance in nearly two years, but provided little incentive for Wall Street to buy.
Overseas, Japan's Nikkei stock average was flat. In Europe, Germany's DAX index rose 0.4 percent, while Britain's FTSE 100 and France's CAC-40 each lost 0.1 percent.