U.S. stocks slide on attack fears ahead of holiday
By Haitham Haddadin
NEW YORK, May 24 (Reuters) - Stocks slid in very thin trade on Friday, with the New York Stock Exchange clocking its slowest day of the year as investors faced renewed fears of more attacks on America and signs of economic softness.
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"All this rhetoric about the terrorism battle keeps a lid on the market," said Michael Kayes, chief investment officer at Eastover Capital Management, which oversees $300 million.
Also dominating investor thinking ahead of the long holiday weekend were concerns over soft demand that dogged chip gear giants like Applied Materials Inc. (NasdaqNM:AMAT - News) and a weaker reading on U.S. economic growth which rattled some investors
Trading floors will be closed on Monday for Memorial Day, and investors opted to sell stocks, wary of staying in the market with the nation on guard for potential attacks like the Sept. 11 assaults that killed more than 3,000 people.
"Coming into a long weekend with anxieties about terrorism, the question is: 'Do I want to be invested?' The answer is maybe not -- you come back Tuesday and start over," said Barry Hyman, chief investment officer at Ehrenkrantz King Nussbaum.
The blue-chip Dow Jones industrial average (CBOT:^DJI - News) fell 111.82 points, or 1.09 percent, to 10,104.26, according to the latest available data. The broad Standard & Poor's 500 Index (CBOE:^SPX - News) was down 13.26 points, or 1.21 percent, to 1,083.82. The technology-laced Nasdaq Composite Index (NasdaqSC:^IXIC - News) lost 36.14 points, or 2.13 percent, at 1,661.49.
For the week, the Dow was down 2.4 percent, Nasdaq dropped 4.6 percent and the S&P was off 2 percent.
Declining stocks outpaced advancers by a ratio of about 19 to 12 on the New York Stock Exchange and 21 to 12 on Nasdaq, where 1.20 billion shares traded. The Big Board logged its lightest volume day for 2002 with 888 million shares changing hands.
U.S. gross domestic product, a key measure of economic growth, grew at a revised 5.6 percent annual rate in the first quarter -- its fastest pace in nearly two years, according to a government report. But the pace was down from advance figures that showed a 5.8 percent clip and below economists' expectations for a 6 percent rate.
"People realize the economy is slowly improving, but not enough to make people raise estimates," said John Forelli, senior vice president at Independence Investment LLC, which oversees $20 billion, adding that investors might have to wait until the third quarter to see big changes in the markets.
Computer maker Sun Microsystems Inc. (NasdaqNM:SUNW - News) said companies are still holding back from investing in technology, but it stood by its forecast of a return to profit in its quarter ending in June. Sun, the second-most active issue on Nasdaq, fell 55 cents to $6.86.
Wall Street house Goldman Sachs lowered sentiment another peg when it cut its investment rating on the chip equipment sector. Since February, the stocks have outperformed the Nasdaq by nearly 30 percent, Goldman said.
Goldman moved Applied Materials, which fell $1.77 to $23.80, and KLA-Tencor Corp. (NasdaqNM:KLAC - News), which slipped $2.66 to $54.43, to "market outperform" from its recommended list.
The S&P semi equipment index (^GSPSEQP - News) sank 3.10 percent.
"The market is locked in worry and anxiety about terrorism," said Hyman. "On top of that, the fundamental news in technology, in particular semiconductors, continues to deteriorate and gives us a less robust spending recovery than anticipated."
In the plus column, shares of home builders' stocks rose after the government reported a surge in new home sales in April. Pulte Homes Inc. (NYSE:PHM - News) stock gained $2.13 to $55.48, helping the S&P homebuilders index (^GSPHOME - News) rise 2.6 percent. Sales of new homes in the United States increased 1.0 percent in April on a surge in the Midwest, as low mortgage rates kept luring buyers.
Another of the market's few bright spots vanished when investment bank Lehman Brothers Holdings Inc. (NYSE:LEH - News) withdrew its $5 billion bid for the CIT unit of Tyco International Ltd. (NYSE:TYC - News). Tyco shares, the most active on the New York Stock Exchange, fell 67 cents, or 2.75 percent, to $23.70, while Lehman's stock slid $1.15, or 1.7 percent, to $64.57.
Earlier, news of Lehman's bid for Tyco's CIT unit had driven Tyco's shares up more than 5 percent.
Biogen Inc. (NasdaqNM:BGEN - News) soared $9.11, or 23 percent, to $49.47 after an advisory panel recommended regulatory approval of the biotech giant's Amevive drug for chronic psoriasis. But sector issues drew little fuel from the news. The American Stock Exchange Biotech index (AMEX:^BTK - News) slumped 3.6 percent.
GlaxoSmithKline's (London:GSK.L - News; NYSE:GSK - News) fell $3.85, or 8 percent, to $42.54. A U.S. judge invalidated GlaxoSmithKline's patents for the top-selling antibiotic Augmentin, paving the way for cheaper copycat versions of the drug that could dent profits for Europe's biggest drugmaker.
Resistance -- the point where sellers are likely to surface -- is at 1,775 for the Nasdaq, 10,275 for the Dow, and 1,106 for the S&P, according to research firm Schaeffersresearch.com. Support -- where buyers are expected to enter -- is at 1,645 for the Nasdaq, 10,100 for the Dow and 1,080 for the S&P. |
