Wall Street Dips as Convention Starts
Wall Street stock indices slid yesterday as many New York based investors and traders stayed home to avoid the Republican National Convention, taking place in the city this week.
A few earnings warnings were enough to tip stocks into losses, and even a further decline in crude oil prices was not enough to persuade investors to buy.
By the close, the Dow Jones Industrial Average was down 0.7 per cent to 10,122.52, while the S&P; 500 eased 0.8 per cent to 1,099.15. The Nasdaq dropped 1.4 per cent to 1,836.49.
Volume was nearly as low as it was on Friday, which marked the thinnest trading day of the year on the New York Stock Exchange. Fewer than 848m shares changed hands yesterday, roughly 40 per cent less than the average daily volume.
In addition to the usual summer torpor, stocks seemed destined to drift because investors appeared unlikely to take on any new risk ahead of the four-day political jamboree in New York. Jim Awad, head of Awad Asset Management, said those not on vacation were warily monitoring the political convention for any indications of terrorist activity as well as to see the performance of President George W. Bush.
He noted that in spite of the skeleton staff on Wall Street, the week would bring several key pieces of economic data, the most important being August's non-farm payrolls, due out on Friday. He alluded to the possibility of low volumes meaning sharp reactions by relatively few investors could send markets soaring or tumbling. "This week could surprise us," he said.
Another thing investors were awaiting was the mid-quarter update from tech bellwether Intel, due on Thursday. Shares in the world's largest chipmaker dipped 1.9 per cent to $21.60 ahead of the report. Other tech shares fared poorly as well, as nervous investors sold off the economically sensitive stocks. Semiconductor shares notched the day's biggest losses, down 2.3 per cent, while the S&P; 500's technology hardware group slipped 1.4 per cent.
In corporate news, investors had a handful of earnings warnings to size up.
Accredo Health was a leading laggard, shedding 20.7 per cent to $22.05 after the company cut its fiscal 2005 earnings forecast sharply, citing lower reimbursements from the government. Alarmed investors ignored its higher earnings in the fiscal fourth quarter.
Tyson Foods, the world's largest meat company, fell 8.3 per cent to $16.26 after it issued its own full year profits warning. The poultry producer blamed poor results from hedging its grain exposures, weaker demand for meat, in the face of a mad cow disease scare and high raw material costs. The stock lost 8 per cent last week, after rival Sanderson Farms missed analysts' estimates due to climbing grain costs and waning prices for chicken breasts, and warned the rest of the year would be plagued by the same problems. Sanderson shares shed 17.8 per cent last week and by the close were 2.4 per cent weaker at $35.78.
Pilgrim's Pride, another leading poultry producer, saw its stock slide 7.3 per cent to $24.95 yesterday.
The disappointments from the food sector did not end there. Interstate Bakeries, maker of Twinkies and Wonder Break, tumbled 42.3 per cent to $4.56, after delaying its annual 10-K filing to regulators for a second time. LNR Property climbed 6.3 per cent to $62.81 after the real estate investment and management company said on Sunday it had agreed to be bought by private investor Cerebus Capital Management for $1.9bn.
Shares in Charles Schwab dipped 3 per cent to $9.47 after reports that UBS, the Swiss investment bank, would buy Schwab's institutional research and trading unit, SoundView Capital Markets, for $265m. US-listed shares in UBS slid 0.7 per cent to $67.60.
Elsewhere, Harrah's Entertainment slid 1.1 per cent to $47.28 after the casino and hotel operator said late on Friday that US regulators had asked for more information about its proposed $9.4bn purchase of rival Caesars Entertainment. Caesars shares eased 1 per cent to $14.92.
|
