Star-Bulletin news services
Investors cautious ahead
of today’s productivity report
NEW YORK >> Stocks slid yesterday as investors focused on the government's upcoming employment report, shrugging off a widely expected decision by OPEC to raise its crude oil output.
Concern over Intel Corp.'s mid-quarter forecast put particular pressure on tech shares, although the report issued after the session was more upbeat than some market participants expected. The promise of more oil and a bullish reading of worker productivity failed to spark a rally as many investors took a cautious tack ahead of the Labor Department report due today.
"Basically, we're just treading water before tomorrow's employment data," said Todd Clark, head of listed equity trading at Wells Fargo Securities. "There's a concern that a creeping rise in energy prices could slow the economy down more, so this is the next data point the market is looking at for guidance."
At the close of trading, the Dow Jones industrial average had fallen 67.06, or 0.6 percent, to 10,195.91.
The broader gauges also finished lower. The Nasdaq composite index slumped 28.72, or 1.4 percent, to 1,960.26, largely on weakness in the semiconductor sector. The Standard & Poor's 500 index shed 8.35, or 0.7 percent, to 1,116.64.
The price of the Treasury's 10-year note closed up 1/4 point, while its yield fell to 4.71 percent from 4.74 percent yesterday. Two-year Treasury notes rose 1/32 point and yielded 2.55 percent, down from 2.65 percent yesterday.
Wall Street remained anxious about the effect higher oil prices are having on the economy despite the decision by the Organization of Petroleum Exporting Countries to raise its production ceiling by 2 million barrels a day.
OPEC agreed to raise the target by an additional 500,000 barrels a day in August if necessary, oil ministers said after meeting in Lebanon yesterday. But with several of OPEC's 11 members already close to their output limits, some analysts are concerned the group may not be able to pump enough oil to dent prices significantly.
"The two major forces in the market today are OPEC and what they had to say, and Intel, and the fears of what they might say. Those are the bookends," said Arthur Hogan, chief market analyst at Jefferies & Co.
After the close, Intel raised its revenue forecast for the second quarter, citing continued strong demand for computer chips. Intel dropped 60 cents to $27.41 during regular trading on speculation that it might lower its estimate. It recovered 54 cents in the extended session.
With so much uncertainty, there was little reaction to a better-than-expected report from the Labor Department on the productivity of America's workers during the first three months of the year. Labor costs also moved up, a worrisome factor that could pressure profit margins if it becomes a trend.
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