Stocks Turn Lower at Late Morning Amid Ongoing Concerns
sg.biz.yahoo.com Tuesday January 14, 12:31 AM By Erin Schulte The Wall Street Journal Online
With nothing notable to lure fresh money into the market Monday, major indexes slipped, and falling crude prices hurting a number of oil sectors like drillers.
Stocks had climbed in early trading, but gains were short-lived. By late-morning, the Dow Jones Industrial Average was off 15 points at 8770, while the Nasdaq composite gave back 5.20 to 1442.50.
ADVERTISEMENT "We're in a trading range, and we're at the high end of that right now. The market lacks a catalyst to get us through the 930 level on the S&P, and there's no good reason to buy stocks at this level," said Ryan Smith, managing director of equity trading at Banc One Investment Advisors in Columbus, Ohio. "We have uncertainty regarding earnings coming out, and geopolitical issues overseas."
The biggest news on Wall Street was the AOL Time Warner's chairman, Steve Case, said he would resign from the top job at the huge but troubled media conglomerate he helped create, succumbing to months of pressure from disgruntled shareholders and board members alike. He will remain a director. The company's shares rose about 2% on the news.
Mr. Case's departure from the top job means the company's leadership will be without any of the key architects of the blockbuster merger of America Online and Time Warner in 2001. The company said Sunday that Mr. Case would step down from the chairman post in May.
Falling crude prices hurt several oil-related sectors after the Organization of Petroleum Exporting Countries decided to increase its production ceiling by 1.5 million barrels a day. Prices have soared in recent weeks as a strike in Venezuela has paralyzed its crude exports.
Driller McMoRan was among the biggest losers on the Big Board, giving up 12%. Pipeline companies like Williams and El Paso fell, by 4.2% and 2.2%.
An earnings warning also hurt the market. Duke Energy warned that fourth-quarter and 2003 earnings will disappoint, prompting Merrill Lynch to downgrade the company to "sell" from "neutral." Its shares dropped 12%.
Merrill cut its earnings outlook and said Duke's announcement raised questions about the sustainability of Duke's $1.10 current dividend payout.
Geopolitical concerns were also at the forefront of investors' minds Monday.
"There was a lot of development with North Korea over the weekend... Some of it was good. If nothing else, it seems like they're trying to push issues forward a bit," said Jim Holtzman, a financial planner at Legend Financial Advisors.
Early Monday, a senior Bush administration envoy said the U.S. is willing to consider energy aid to North Korea as a means to end its intensifying nuclear standoff with the communist country.
North Korea withdrew from the landmark Nuclear Nonproliferation Treaty last week and has threatened to resume long-range missile tests and to begin reprocessing spent fuel rods from its nuclear reactor to make atomic bombs.
Fourth-quarter earnings season will give investors something to chew on later in the week, with a flurry of big-name reports from companies such as Intel, General Motors, General Electric and Microsoft. Many analysts have predicted that this earnings season will hold some pleasant surprises, which would be a plus for the market.
Displaying some resiliency, the stock market managed a slim advance Friday despite news that the country lost jobs last month. The Dow industrials climbed 8.77 points to 8784.95. The Nasdaq Composite Index, dominated by technology issues, added 9.26 to 1447.72.
Among stocks to watch Monday, Wal-Mart Stores is expected to make a bid for Safeway, Britain's fourth-largest supermarket group, which has agreed to be acquired by William Morrison Supermarkets. Wal-Mart shares slipped.
Corning said late Friday that its recent cost-cutting moves will save it more than $400 million annually, but the company plans on making additional cuts to bring it to profitability in 2003. The world's largest maker of optical fiber used in communications networks already has cut its work force to 23,500 employees from its high of 42,000 workers in 2000. Its shares rose 1.6%.
In major U.S. market action:
Stocks slipped. On the Big Board, where 504.4 million shares traded, 1,666 stocks advanced and 1,371 declined. On the Nasdaq, where 707 million shares changed hands, 1,570 issues gained while 1,331 fell.
Bonds inched higher. The 10-year Treasury note rose less than 1/8 point, or $1.25 for each $1,000 invested. The yield, which moves inversely to price, fell to 4.13%. The 30-year bond was ahead about 1/4 point to yield 5.03%.
The dollar was mixed. It traded at 118.89 yen, down from 119.22 late Friday in New York, while the euro fell against the dollar to $1.0554 from $1.0572.
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