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Wall St. steps back
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November 27, 2001: 5:18 p.m. ET
Despite Intel push, U.S. stocks retreat on weak consumer confidence data.
By Staff Writer Alexandra Twin
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NEW YORK (CNN/Money) - U.S. stocks retreated from a two-day winning streak Tuesday as weak consumer confidence numbers outshined a brief tech recovery sparked by positive forward-looking statements from a chip leader.
The Conference Board's consumer confidence index showed a slide to 82.2 in November from an adjusted 85.3 reading in October, missing the estimates of economists surveyed by Briefing.com, who had expected a rise to 86.5.
The news pressured markets for most of the morning, before earnings guidance from Intel (INTC: up $0.44 to $32.31, Research, Estimates) sparked an about-face on the tech-heavy Nasdaq composite.
Speaking at a Credit Suisse First Boston technology conference, the No. 1 chipmaker's chief financial officer said the company is comfortable with guidance for the current quarter.
In addition, Federal Reserve Governor Laurence Meyer gave some hope to investors betting on more interest rate cuts in the near future, saying aggressive action was necessary, including the potential for pushing inflation-adjusted interest rates into negative territory.
The overnight lending rate for banks currently stands at 2.0 percent after 10 consecutive Fed cuts this year.
But the stab at a recovery on the day was brief, with indexes soon returning to negative territory.
The Dow Jones industrial average fell 110.15 to 9,872.60. The Nasdaq composite was down 5.27 to 1,935.96, and the Standard & Poor's 500 index fell 7.92 to 1,149.50.
"Fluctuation is normal after a run-up. The economic news is not good and it's not going to be good for a while, but we are in recovery mode," Al Goldman, chief market strategist at A.G. Edwards, told CNNfn's Street Sweep.
Asian stock markets finished mostly lower Tuesday, while European bourses closed mixed.
Treasury prices rose, with the 10-year note yield falling to 4.94 percent. The dollar gained against the yen and pulled back against the euro. Light crude oil futures gained 84 cents to $19.48 a barrel in New York, reversing some recent declines.
Market breadth was negative. On the New York Stock Exchange, decliners outpaced advancers 3-to-2 as 1.25 billion shares traded. On the Nasdaq, losers outnumbered winners by a 9-to-8 margin as 2.08 billion shares changed hands.
On Wednesday, two hardware and equipment names are due to release results. Brocade Communications (BRCD: down $0.10 to $31.84, Research, Estimates) is expected to report earnings of 4 cents per share, a decline from the 11 cents per share earned one year earlier.
Credence Systems (CMOS: up $0.02 to $17.05, Research, Estimates) is forecast to have lost 37 cents per share, which compares with 96 cents per share earned a year ago.
Mixed retail sales, tech moves
Semiconductors, telecoms and retailers were among the most active sectors, with companies reporting a mix of forward-looking statements.
The Intel reaffirmation gave a boost to chip sector, notably chip-equipment makers Applied Materials (AMAT: up $1.91 to $41.97, Research, Estimates) and KLA-Tencor (KLAC: up $2.12 to $52.17, Research, Estimates).
The CEO of BEA Systems (BEAS: up $0.76 to $18.04, Research, Estimates) said the business software maker is also comfortable with current-quarter estimates.
The positive tide also spread into the networking sector, with names such as Sun Microsystems (SUNW: up $0.17 to $13.47, Research, Estimates) moving into the positive territory.
But Finnish mobile phone maker Nokia (NOK: down $1.52 to $23.72, Research, Estimates) issued a cautious forward-looking statement, confirming that it would meet current fourth-quarter estimates but reducing its estimate for global handset sales for 2001. It also issued a somewhat conservative estimate for 2002 handset sales.
Robertson Stephens downgraded advertising and marketing firm TMP Worldwide (TMPW: down $1.99 to $42.01, Research, Estimates) to "market perform" from "buy," pointing to bad signs from the employment sector.
Kmart (KM: down $0.47 to $6.38, Research, Estimates) reported a third-quarter loss that was narrower than expected but far wider than the loss it reported a year earlier.
In addition, several weekly measures of retail sales showed moderate growth from the previous week, indicating a mixed start to the important holiday spending season.
Internet retail names that had risen considerably Monday, such as Amazon.com (AMZN: down $0.73 to $11.48, Research, Estimates) and eBay (EBAY: down $0.39 to $64.77, Research, Estimates), pulled back Tuesday.
Rambus loses out to Infineon
A number of new developments in corporate partnerships or disputes were announced as well.
In the latest round of its lawsuit, a U.S. judge barred memory chipmaker Rambus (RMBS: down $0.68 to $9.41, Research, Estimates) from asserting certain patents against some of Infineon's (IFX: down $0.38 to $20.82, Research, Estimates) memory chips.
Dynegy (DYN: up $1.64 to $40.89, Research, Estimates) is negotiating a possible reduction in the price of its previously agreed acquisition of troubled energy trader Enron (ENE: up $0.10 to $4.11, Research, Estimates).
On a few positive notes, Linux distributor Red Hat (RHAT: up $1.61 to $7.62, Research, Estimates) will provide open source software, services and support for the IBM (IBM: down $2.13 to $114.20, Research, Estimates) eServer product line.
Fiber-optics communication network builder Level 3 Communications (LVLT: up $0.84 to $6.54, Research, Estimates) signed a multi-year services deal with AOL Time Warner (AOL: down $0.61 to $36.76, Research, Estimates) for an undisclosed sum. AOL Time Warner is the parent of CNN/Money.com.
Silver lining in economic data
While the consumer confidence news was generally greeted with disappointment, some analysts argued that a closer look at the report offers a more positive interpretation.
The total decline reflects a fall in the "current conditions" component of the survey, which is tied largely to current unemployment, Ian Shepherdson, chief economist at High Frequency Economics, wrote in a morning note to clients. But the number overshadows what was actually a rise in the more forward-looking "expectations" component of the survey.
"Expectations are a leading indicator and are consistent with modest spending gains," Shepherdson wrote. "Stronger stocks will push the index up further, and soon. This is a good report."
In addition, though ignored by investors, a report from the National Association of Realtors showed existing home sales rose 5.5 percent in October to an annual rate of 5.17 million units, beating estimates of 5 million. 
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