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Economic worries
keep market stalled
NEW YORK >> Increasingly despondent investors sent stocks falling again yesterday, as poor earnings outlooks and concerns about the economy eclipsed a pair of multibillion-dollar mergers. The Nasdaq composite index and Standard & Poor's 500 both closed at new lows for the year.
Health care and pharmaceutical stocks rose as Mylan Laboratories Inc. made a $4 billion all-stock offer for King Pharmaceuticals Inc. Financial stocks also moved slightly higher as Spanish bank Banco Santander offered $15.3 billion for British mortgage lender Abbey National.
Trading on Wall Street remained lackluster, however, as investors awaited earnings reports later in the week from Aetna Inc., Boeing Co., Exxon Mobil Corp., Time Warner Inc. and Verizon Communications Inc.
Even more importantly, investors were waiting for more economic data to help determine whether the economy's slowdown in June was transitory -- or a sign of things to come.
"This is much more than the usual summer doldrums. There's a message coming from the market, here," said Hugh Johnson, chief investment officer at First Albany Corp. "If I were to simplify that message, it's that the economy and earnings in the third and fourth quarter won't be as strong as we expected."
The Dow Jones industrial average fell 0.30, or nearly flat, at 9,961.92, after having been moderately lower for much of the session. It was the Dow's lowest close since May 20.
Broader stock indicators were also lower. The Standard & Poor's 500 index was down 2.13, or 0.2 percent, at 1,084.07, its lowest close since Dec. 17. The Nasdaq composite index shed 10.07, or 0.5 percent, to 1,839.02, its lowest point since Oct. 2.
The price of the benchmark 10-year Treasury note fell 716 point and its yield, which moves in the opposite direction, rose to 4.49 percent compared with 4.43 percent late Friday. The 2-year note fell 332 point to yield 2.71 percent.
With more than half the companies that make up the S&P 500 reporting earnings so far, more than two-thirds have exceeded estimates for second-quarter earnings. But the strong profits have been overshadowed by lower outlooks for the rest of the year from a number of major corporations.
Even new strength in the housing sector was not enough to rouse buyers yesterday. Existing home sales rose 2.1 percent to a new record in June, according to the National Association of Realtors, as home buyers rushed to lock in low interest rates.
"We certainly haven't had that one blockbuster story to focus on. In the absence of that, the sideways trend we've been expecting has become a downtrend," said Brian Pears, head equity trader at Victory Capital Management.
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