NEW YORK (CNN/Money) -
U.S. stocks declined Monday, on the lightest volume day of the year, as investors took profits after a two-week rise and kept an eye on the first day of the Republican National Convention.
Tuesday brings reports after the start of trading on consumer confidence and manufacturing in the midwest region. Both are likely to impact early trading.
The tech-fueled Nasdaq composite (down 25.60 to 1,836.49, Charts) lost close to 1.4 percent Monday. Tech stocks had been the most buoyant over the past two weeks and suffered the steepest round of profit-taking on the session. In particular, semiconductors weakened.
The Dow Jones industrial average (down 72.49 to 10,122.52, Charts) lost around 0.7 percent and the Standard & Poor's 500 (down 8.62 to 1,099.15, Charts) index lost around 0.8 percent.
Mixed reports on personal income and spending and some profit warnings helped create a negative tone.
Trading volume set a new low for 2004 Monday, on both the New York Stock Exchange and the Nasdaq.
"It's the last week of August, people are on vacation and a lot of the big institutions in New York are half-staffed," said Tim Heekin, head of stock trading at Thomas Weisel Partners.
On the New York Stock Exchange, losers beat winners three to two as 843 million shares changed hands. On the Nasdaq, decliners topped advancers by more than two to one as 991 million shares were exchanged.
Trading is always light in late summer, but that's likely to be exacerbated this week due to the convention, which began Monday morning and runs through Thursday evening, when President Bush is set to accept his party's nomination.
Due to crowds and security concerns, many New York-based Wall Street professionals are on vacation this week or are working from home. Though last month's Democratic National Convention in Boston passed without incident, there remains some concern about a possible terrorist attack at the RNC.
Analysts say that should the convention pass without incident, after Labor Day, many Wall Streeters will return and the increased volume could bring short-term stock gains.
"I hope we'll see a nice pick-up in business as September gets underway," Heekin added.
Due just after the start of trading, consumer confidence in August is expected to have fallen to 103.4 from 106. in July. Due around the same time, the Chicago Purchasing Managers' index of manufacturing activity is likely to have fallen to 60.0 in August from 62.0 in July.
What moved?
Among the tech issues leading the decline, the semiconductor sector was particularly weak.
Intel (INTC: down $0.42 to $21.60, Research, Estimates) lost nearly 2 percent, with investors a bit edgy ahead of the company's mid-quarter update, expected after the close Thursday.
Texas Instruments (TXN: down $0.63 to $19.71, Research, Estimates) lost more than 3 percent, and the Philadelphia Semiconductor (down 8.70 to 373.64, Charts) index, or the SOX, lost 2.2 percent.
Of the 30 issues that comprise the Dow composite, 29 declined. Caterpillar (CAT: down $1.45 to $72.25, Research, Estimates) and Honeywell (HON: down $0.78 to $35.68, Research, Estimates) were the biggest losers, both off 2 percent.
Accredo Health (ACDO: down $5.80 to $22.00, Research, Estimates) warned that fiscal 2005 earnings would sharply miss estimates due to lower reimbursements from government insurers.
The company, which provides treatment options for people with chronic illnesses, also reported fiscal fourth-quarter earnings that rose from a year earlier, but investors focused on the warning and shares tumbled 22 percent.
Shares of United Rentals (URI: down $4.39 to $16.00, Research, Estimates), an industrial gear rental company, fell 21.5 percent on news that the Securities and Exchange Commission has subpoenaed certain accounting information.
Tyson Foods (TSN: down $1.47 to $16.26, Research, Estimates) warned that fiscal 2004 earnings won't meet expectations due to sluggish demand for chicken and beef and higher raw material costs. The company also said its fourth quarter would be "difficult," but did not give specific numbers. Shares fell 8.3 percent.
In other news, shares of Interstate Bakeries (IBC: down $3.34 to $4.56, Research, Estimates), maker of Wonder Bread and Hostess Twinkies, fell more than 42 percent after the company delayed filing its annual report for the second time and said it hired a turnaround company as a means of handling further financial problems.
On the upside, commercial real estate company LNR Property (LNR: up $3.71 to $62.81, Research, Estimates) rose 6.3 percent after agreeing to a buyout offer from Cerberus Capital Management, a privately-held investor, for $1.9 billion plus the assumption of debt.
Income figures disappoint
Released before the open, government reports on personal income and spending showed that spending rebounded in July even as income recorded the weakest gain since November 2002.
Personal income rose 0.1 percent in July after rising 0.2 percent in June. Economists surveyed by Briefing.com expected income to rise 0.5 percent, on average. Personal spending rose 0.8 percent in July after falling a revised 0.2 percent in June. Economists thought it would rise 0.7 percent.
The week's big economic event to watch is Friday's August report on unemployment and non-farm payroll. Due for release shortly before the open, employers are expected to have added 150,000 jobs to their payrolls after adding a scant 32,000 in July. The unemployment report, generated by a different survey, is expected to hold steady at 5.5 percent.
Light crude oil futures for October delivery tumbled, falling 90 cents to settle at $42.28 a barrel on the New York Mercantile Exchange.
Treasury prices rose, pushing the 10-year note yield down to 4.18 percent from 4.22 percent late Friday. Treasury prices and yields move in opposite directions.
In currency trading, the dollar declined against the euro and gained against the yen.
COMEX gold gained $4.60 to settle at $410 an ounce as jittery investors poured money into the safe-haven commodity.
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