Wall St Loses Gains as Iraq Relief Evaporates
Wall Street failed to hold early gains on Monday and ended lower as investors' relief that the US handover of Iraq happened two days early evaporated.
Traders said there was little conviction behind the rally, as volume was light with many investors on holiday and many waiting for the Federal Reserve's monetary policy meeting on Tuesday and Wednesday.
Bernie Schaeffer, options analyst and head of Schaeffer's Investment Research, also noted that the Dow was approaching technical resistance levels at 10,500, which might have contributed to the drop.
The Dow Jones Industrial Average closed down 0.1 per cent at 10,357.09, while the S&P; 500 slid 0.1 per cent to 1,133.52. The Nasdaq Composite dropped 0.3 per cent to 2,019.82.
Altria led the Dow, climbing 3.8 per cent to $49.60, as investors in Big Tobacco hailed a legal victory for the industry. RJ Reynolds Tobacco was up fractional ly at $66.85. Late on Friday, a US district judge granted the industry the right to seek an immediate appeal against a decision against it. A ruling last month denied the industry's motion to dismiss a "disgorgement" claim, which would force the industry to surrender some past profits as part of a Justice Department lawsuit.
Altria's leap also made the food, beverage and tobacco group the leader on the S&P; 500. Gains by HJ Heinz, the maker of ketchup and other condiments, helped. Shares rose 2.6 per cent to $38.65 on a positive cover story in the weekly newspaper Barron's.
Allegheny Technologies, the maker of speciality metals, climbed 11.7 per cent to $17.44, the best showing on the S&P; 500, after it announced it would post its first profit in more than two years, buoyed by rising demand for its stainless steel and gains for cutting costs on retiree medical benefits.
Delta Air Lines climbed 6.4 per cent to $7.03, one of the best performances on the S&P; 500, on two pieces of good news: the company hired Boeing to manage its inventory of spare parts in a cost-cutting move, and rival United Airlines failed in its third and final bid to win federal aid to help it emerge from bankruptcy. United Airlines shares fell 5 per cent to $1.33.
Other airlines also rose, including Continental Airlines, up 3.7 per cent to $11.05, and AMR, parent of American Airlines, up 4.6 per cent to $11.98.
Traders also said that part of the reason for Delta's big move was a "massive" short position on the stock as speculators bet the carrier would continue to struggle. Part of the upward move is those traders buying shares to cover their bets.
Titan, the defence technology company, continued last week's fall, dropping 8.1 per cent to $13.36. The company shed 20.3 per cent on Friday, as news emerged that its deal to be acquired by defence contractor Lockheed Martin fell through.
Taser, maker of stun guns, climbed 2 per cent to $42.94 as investors applauded news the company got an order for 265 of its X26 Conducted Energy Weapons worth $436,000 from the Dayton, Ohio police department.
Elan, the Irish drugmaker, rose 1.8 per cent to $24.40, while its US partner Biogen Idec rose 0.5 per cent to $62.70, on news their multiple sclerosis drug garnered priority review from US regulators.
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