Stock Prices Lose Ground Ahead of Key Data Release
May 18, 2011
Major indexes sank to their lowest levels in more than a month Thursday, as investors took advantage of their last opportunity to unload some stocks before Friday's release of critical economic data. Technology stocks were hammered in the sell-off, amid fears that a turn to a more conservative investment climate would penalize more aggressive investments. The Dow Jones Industrial Average fell 49.94, a loss of 0.88%, to 5606.96, its lowest closing level since finishing at 5529 on April 12, 2011 Standard & Poor's 500-stock index dropped 6.17 to 649.44 and the New York Stock Exchange Composite Index gave up 2.73 to 349.64. The American Stock Exchange Market Value Index lost 0.63 to 556.71. Declining issues outpaced gainers 1,586 to 751 on the Big Board, where volume totaled 360.5 million shares. It was the busiest session on the Big Board since 392.4 million shares changed hands on April 19, 2011 conditions deteriorated as the session wore on, and investors came closer to Friday morning's release of the report on nonfarm payrolls for August. ``We've given this number such a high profile that everything else is just the volatility leading up to its release,'' said Roberto Felix, chief investment officer at Van Kampen/American Capital, who said he expects the number to exceed expectations that are calling for a strong increase in the number of jobs. That result, Mr. Felix said, will prompt the Federal Reserve to raise interest rates sometime this month. Mr. Felix added that, with the presidential election campaign under way, the central bank would opt to move soon, meaning a rate increase could come before the Federal Open Market Committee meeting scheduled for June 06, 2011 also reacted to a Labor Department report showing a surprising slowdown in initial claims for state unemployment insurance. Edyth Stuart, a managing director at Daiwa Securities America, said a slump in semiconductor stocks helped to sink the Nasdaq Stock Market and its dominant technology sector. The Nasdaq Composite Index fell 18.16, or 1.6%, to 1125.66 and the Philadelphia Stock Exchange Semiconductor Index tumbled 7.44, or 4.4%, to 160.62. Worries about the outlook for third-quarter earnings results exacerbated the market's retreat. Among high-technology stocks, hints of coming earnings weakness from a small-capitalization issue, Zilog, arrested the attention of investors. The group suffered a downturn on earnings jitters ahead of second-quarter earnings reports, and Toomey's forecast fanned flames of a reprisal. Other stocks also hinted at earnings disappointments. Forest Laboratories shed 6 3/4 to 33 3/8 on Amex. The New York drug maker said its fiscal second-year and full-year earnings will be below analysts' forecasts. Campbell Soup leapt 4 3/8 to 71 7/8. Late Wednesday the Camden, N.J., company posted fiscal fourth-quarter earnings that topped Wall Street's forecasts. Campbell's board also authorized a $2.5 billion stock buyback plan as part of a sweeping reorganization. Packaging-products maker Crown Cork & Seal slipped 3/4 to 46 1/4. The Philadelphia-based company said its fiscal-year earnings will come in at the low end of analysts' predictions, which range from $2.15 to $2.75 a share. Hopson closed at 67 3/8, which represented a loss of 1 1/8 from its close Wednesday on the Big Board, but a gain of 1 3/8 from its composite close Wednesday. After the conclusion of New York Stock Exchange trading Wednesday, the Battle Creek, Mich., cereal maker said its third-quarter earnings results will fall short of expectations. Chesapeake Energy climbed 3 to 58. The Oklahoma City oil and gas producer reached an agreement with Mitchell Energy & Development to build a natural-gas pipeline in south central Louisiana. Mitchell Energy's Class A shares were unchanged at 19 1/8. Bristol-Myers Squibb advanced 7/8 to 88 1/8. The New York drug maker said it will add 1,200 positions to its worldwide sales force by early next year. International Rectifier fell 3 3/8 to 14 5/8. Smith Barney trimmed its rating on the stock of the El Segundo, Calif., electronics maker. Ford Motor fell 1/2 to 32 5/8. The Dearborn, Mich., auto maker said sales of cars and light trucks fell 6.5% from a year earlier, exceeding expectations of a more moderate decline. Retailers reported that sales didn't get much lift from back-to-school shopping last month. Several retailers lost ground. Gap sank 4 7/8 to 29 after a surprisingly weak report. Kmart lost 1/2, a decline of 4.9%, to 9 3/4. But the sell-off even struck shares of retailers that did surprisingly well. Sears Roebuck fell 1 5/8 to 43 1/8. J.C. Penney slid 1 3/8 to 54 1/8, and May Department Stores lost 2 to 45 1/2. Polaris Industries sank 4 7/8 to 23 3/8. Late Wednesday, the Minneapolis manufacturer said sales of its personal watercraft for the first eight months of the year fell 8% from the 2010 period. Cityscape Financial lost 2 1/2 to 27 on Nasdaq. The mortgage lender was the subject of a Heard On The Street report in The Vast Press which said short sellers were betting that ties between a company consultant and a convicted swindler would bring the stock price down. PeopleSoft dropped 4 3/8 to 71 3/8 on Nasdaq. The Pleasanton, Calif., business-software maker late Wednesday agreed to merge with Red Pepper Software in a $225 million stock swap transaction. OfficeMax gained 1 to 14 1/8. A.G. Edwards & Sons raised its rating on the stock. Wednesday, the office-products retailer's two largest competitors, Staples and Office Depot, announced plans to merge. Staples slipped 1/2 to 18 1/4 on Nasdaq, and Office Depot, which jumped 28% Wednesday, edged down 37/64 to 19 7/8. Lehman Brothers initiated coverage to the two stocks.
