NEW YORK (CNN/Money) -
Sellers took control on Wall Street Thursday, ultimately goading a mixed session into a full-fledged selloff by the close, on the heels of a significant dividend cut by Kodak and a series of end-of-quarter moves by portfolio managers.
Earlier in the week, currency concerns sparked a bout of profit-taking and on Wednesday, it was OPEC's choice to cut oil production in the fourth quarter that brought out the bears. Thursday set stocks back yet again.
Barring any substantial rally Friday, stocks are set to close lower for the week.
No quarterly earnings are due Friday. Among the economic reports expected, the University of Michigan's final reading on consumer sentiment for September is likely the most significant, said Paul D. Mendelsohn, chief investment strategist at Windham Financial Services.
"That's always an important number because it moves in line with employment and consumer spending," Mendelsohn said. "But I wouldn't expect it to have a big impact on direction tomorrow (Friday)."
Released shortly after the start of trading, the final reading on consumer sentiment is forecast to come in at 88.5, according to Reuters Research, up from a previous index of 88.2.
The final reading on second-quarter gross domestic product growth is also due before the open and is forecast to come in at an annual rate of 3.1 percent, unchanged from the earlier reading.
Thursday's market
The Nasdaq composite (down 26.46 to 1817.24, Charts) fell 1.4 percent, the Dow Jones industrial average (down 81.55 to 9343.96, Charts) fell 0.9 percent, and the Standard & Poor's 500 (down 6.11 to 1003.27, Charts) index lost 0.6 percent.
The day's economic reports were too lukewarm to either inspire a steep selloff or rally, and a mixed round of bullish and bearish calls from a few brokerage firms and influential corporations just added to the confusion. The one constant throughout the session was the sharp selloff of Dow stock Eastman Kodak, which closed nearly 18 percent lower and was the industrial average's biggest problem of the day.
However, profit-taking was likely the main culprit Thursday. Year-to-date, the Dow is up around 12 percent, the S&P is up around 14 percent, and the Nasdaq is up more than 36 percent as of Thursday's close. As such, investors may be itching to take some profits and may also be worrying that stocks have surged too far, too fast, analysts said.
Though the rally has progressed in fits and starts since March, the hiccups lately have been more violent.
"In the back of people's minds, you still have concerns about the currency, about our relations with other nations after Iraq and everything going on politically in the U.S., and it's making the market a little indecisive right now," said Peter Green, a market analyst at MKM Partners.
September started with a bang, but it looks to be going out with a whimper. As of Thursday's close, the Dow and the S&P 500 have erased all of their monthly gains and the Nasdaq is just barely ahead by a nose.
The movers
In corporate news, Eastman Kodak (EK: down $4.84 to $22.15, Research, Estimates) tumbled nearly 18 percent after the company said it will cut its dividend by 70 percent and shift its business away from film and toward digital photography and ink-jet printers.
The one notable gainer on the Dow was Walt Disney (DIS: up $0.50 to $20.31, Research, Estimates), which rose 2.5 percent after Goldman Sachs upgraded it to "outperform" from "in-line" and raised its earnings forecast for the media and entertainment conglomerate.
Bisys (BSG: down $3.72 to $12.95, Research, Estimates), a business and educational services provider, tumbled 22.3 percent in unusually active NYSE trade after the company warned that it won't meet current-quarter and fiscal-year 2003 earnings targets.
Shares of contract manufacturer Flextronics (FLEX: down $1.10 to $13.90, Research, Estimates) fell 7.3 percent in active Nasdaq trade after a California jury ordered the company to pay almost $1 billion over a contract dispute. The company vowed to fight the verdict.
Economic reports also weighed on Wall Street Thursday. The August reading on durable goods orders showed a surprise drop of 0.9 percent, as the demand for autos fell. Economists surveyed by Reuters had expected a rise.
The weekly jobless claims report, released before the opening bell, showed the number of first-time unemployment benefits claims dropping last week more than expected, but the decline was largely due to the impact of Hurricane Isabel, which forced many unemployment offices to close.
Even news that the housing market remains robust despite the recent increase in mortgage interest rates failed to inspire a turnaround in the stock market. Sales of new homes jumped in August to the second highest rate on record. Sales of existing homes also rose to a record high rate.
Market breadth was negative, with the number of losers outweighing gainers by more than two to one on the Nasdaq, on volume of 2 billion shares, and by nearly three to one on the NYSE, where 1.50 billion shares traded.
The stock selling was good for Treasury prices. The 10-year note's yield fell to 4.09 percent from 4.13 percent late Wednesday. The dollar was slightly lower versus the euro, but gained versus the yen.
NYMEX light sweet crude oil futures added 5 cents to settle at $28.29 a barrel. COMEX gold fell $2.50 to settle at $385.90 an ounce.
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