NEW YORK (CNN/Money) -
U.S. stock markets tumbled Tuesday, dragged down by a spike in oil prices and more worries about the pace of economic and corporate profit growth in the second half.
The Nasdaq composite (down 32.67 to 1,859.42, Charts) lost 1.7 percent. The Dow Jones industrial average (down 58.92 to 10,120.24, Charts) and the Standard & Poor's 500 (down 6.93 to 1,099.69, Charts) index both lost around 0.6 percent.
Oil prices in particular weighed on sentiment, rising after the head of OPEC said that the cartel can't do anything to bring down prices, due to limited supplies. Light crude oil prices ended the session at a new all-time high of $44.15, up 33 cents.
"The oil issue is pretty much not abating and I think that is weighing on the market," said Timothy Ghriskey, chief investment officer at Solaris Asset Management. "The price is linked to terrorism worries, to strong demand for oil given the global expansion, and to limited supplies."
Continuing the trend of disappointing June economic data, reports on personal income and spending missed estimates. Personal income in June rose 0.2 percent, after rising 0.6 percent in May. That was short of expectations for a rise of 0.3 percent. More problematic, personal spending fell 0.7 percent in June, after rising 1.0 percent in May. Economists expected it to fall 0.1 percent.
Adding to the weak tone was the monthly employment survey from Challenger, Gray & Christmas, which showed an increase in the number of job cuts employers planned in July from the previous month and from a year earlier.
"The Challenger numbers, most of the numbers we've seen for two months running have shown slower growth," said Barry Hyman, equity strategist at Ehrenkrantz King Nussbaum. "It would be a mistake to translate slower growth into something more than what it is, but the slowdown is enough to keep the market desperately clinging to the lower end of the trading range."
Reports are due shortly after the open Wednesday on factory orders and the services sector of the economy.
Factory orders are expected to have risen 0.5 percent in June, according to Briefing.com estimates. Orders fell 0.3 percent in May.
The Institute for Supply Management's services sector index is expected to have risen to 61.5 in July from 59.9 in June.
However, the week's biggest report is bound to be Friday's July employment report. In particular, investors will be looking to see if June's weaker-than-expected rise in payrolls was an anomaly or the new trend.
What moved?
A variety of heavily-weighted tech issues tumbled, including Microsoft (MSFT: down $0.45 to $28.07, Research, Estimates) and Cisco Systems (CSCO: down $0.51 to $20.74, Research, Estimates).
The chip sector as a whole was weak, with Intel (INTC: down $0.73 to $24.17, Research, Estimates) losing 3 percent and the Philadelphia Semiconductor (down 15.79 to 402.95, Charts) index, or the SOX, losing more than 3 percent.
Vishay Intertechnology (VSH: down $2.47 to $13.45, Research, Estimates) fell 15.5 percent after reporting quarterly earnings that rose from a year ago, but missed expectations. The semiconductor gear maker also said that third-quarter results won't show any improvements from the second quarter, due to seasonal trends.
Qwest Communications (Q: down $0.80 to $3.17, Research, Estimates) tumbled 20 percent in active New York Stock Exchange trade after the local telephone provider posted a wider-than-expected loss that was steeper than a year earlier. The company said the setback was due to lower sales of local service and charges it took for job cuts and legal costs.
Ligand Pharmaceuticals (LGND: down $5.41 to $8.18, Research, Estimates) lost close to 40 percent in very active Nasdaq trade. The company reported a second-quarter loss early Tuesday that was steeper than a year earlier and what analysts were expecting. The drugmaker also said it has ended its relationship with its auditor Deloitte & Touche.
Priceline.com (PCLN: down $3.44 to $20.29, Research, Estimates) tumbled 14.5 percent. The online travel discounter said late Monday that third-quarter earnings would come in between 25 cents and 30 cents per share, versus expectations for a profit of 31 cents per share. That overshadowed the company's second-quarter earnings, which rose from a year earlier and topped estimates.
Automakers were in the spotlight following the midday release of July auto sales. Overall U.S. auto sales strengthened in July after a pullback in June, but results were mixed.
Ford Motor (F: down $0.34 to $14.71, Research, Estimates) reported its best sales month of 2004, but the results were weaker than a year ago. General Motors (GM: down $0.23 to $43.07, Research, Estimates) also reported sales that fell from a year ago. DaimlerChrysler (DCX: down $0.65 to $43.89, Research, Estimates) reported sales that rose from a year ago.
On the upside, Adobe Systems (ADBE: up $1.22 to $43.19, Research, Estimates) rose nearly 3 percent after the software maker boosted its third-quarter revenue and earnings forecast to a range that surpassed expectations. The company cited stronger demand for its Photoshop and other software.
Market breadth was negative. On the New York Stock Exchange, losers edged winners by eight to seven on volume of 1.33 billion shares. On the Nasdaq, decliners topped advancers by more than two to one as 1.48 billion shares changed hands.
U.S. stock markets started off in the red Monday on weekend reports that financial institutions were vulnerable to terrorist attacks. However, investors managed to work through those worries and push the markets into positive territory by the close.
Treasury prices inched higher, pushing the 10-year note yield down to 4.42 percent from 4.45 percent late Monday. Treasury prices and yields move in opposite directions. The dollar rose versus the yen and euro.
COMEX gold added $2.10 to settle at $396.50 an ounce.
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