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US Stocks Down, With Nasdaq At Its Worst On Apple View January 18, 2007

Posted by notapundit in Economic News.

NEW YORK (Dow Jones)–Apple’s subdued second-quarter outlook plus guidance from Lam Research that was seen as lacking helped propel the Nasdaq Composite Index to its worst session of the year.

Oil’s slide below $50 a barrel affected Dow Jones Industrial Average member Exxon Mobil, although fellow Dow component Home Depot rose on encouraging housing news and Tribune advanced on a takeout offer.

The Dow Jones Industrial Average lost 9.22, or 0.07%, to 12567.93. The Nasdaq Composite fell 36.21, or 1.46%, to 2443.21, its biggest point and percentage decline since Nov. 27 of last year. The Standard & Poor’s 500 Index declined 4.25, or 0.3%, to 1426.37.

The market’s downward move “was primarily caused by the weakness in the tech sector, especially by Apple and the semiconductor group,” said Jim Stanton, president of MarketCycles Research. “They really took it on the chin and that shook investors’ confidence in general, so there was spillover into the rest of the market.”

Apple lost 5.88, or 6.2%, to 89.07, down 8.3% since Tuesday when the stock closed at an all-time high of 97.10. The consumer electronics company reported Macintosh computer shipments that were flat with the previous quarter and offered a muted second-quarter outlook.

Lam Research (Nasdaq) lost 7.91, or 15%, to 46.22. The chip equipment maker issued a bearish outlook for the third quarter. The outlook weighed heavily on just about every other chip equipment stock. Applied Materials dropped 1.15, or 5.9%, to 18.25; Novellus Systems fell 2.19, or 6.8%, to 30.19; and Varian Semiconductor Equipment Associates declined 5.41, or 12%, to 40.67, all on the Nasdaq.

Oil was an enemy to energy stocks, with Exxon Mobil losing 50 cents to 71.96. Crude-oil futures dipped below $50 a barrel for the first time since late May of 2005 and closed at $50.48, off 3.4%. The drop came after inventory data showing a gain last week of 6.8 million barrels, the biggest increase in over four years.

Home Depot rose 58 cents, or 1.4%, to 40.87. The Commerce Department reported building permits rose last month for the first time since January 2006, including a 1.2% climb in authorizations for single-family homes. Housing starts increased by 4.5% to a seasonally adjusted 1.642 million annual rate.

Tribune rose 56 cents, or 1.8%, to 30.90. The media company received a buyout offer from its largest shareholder, the Chandler Trusts, in a deal valued at about $31.70 a share. Investors bought in even though the overture was barely above the stock’s current market price and well below the value that the Chandlers put on the company just six months ago.

Volume on the New York Stock Exchange was 1.62 billion shares. Down volume beat up by 971 million to 623 million, and stocks that fell in value exceeded those that rose, 2,026 to 1,302.

The final Dow Jones Industrial Average close was 12567.93, down 9.22. On the New York Stock Exchange, there were 1,301 issues advancing, 2,027 declining and 151 unchanged.

NYSE volume totaled 1,672,497,340 shares, compared with 1,576,303,050 Wednesday.

The NYSE Composite Index was 9125.00, down 20.88. The average price per share fell by 12 cents.

Merrill Lynch ended with a loss of 1.41, or 1.5%, to 95.40 after starting the session with a gain. Fourth-quarter earnings sprinted 68% to $2.35 billion, or $2.41 a share, leaping past analysts’ expectations for $1.92 a share. But there were some cautionary words. Goldman Sachs, for one, said it was “somewhat concerned that the private equity gains and associated banking fees windfall that Merrill experienced in (the fourth quarter) will be challenging to repeat and slower to develop in future quarters.”

Abbott Laboratories rose 1.24, or 2.4%, to 52.79 and General Electric added 2 cents to 38. After the close, GE said it plans to buy Abbott’s in-vitro and point-of-care diagnostics businesses for $8.13 billion in cash, as the conglomerate makes a deeper push into the world of health care and medical devices.

Knight Capital Group (Nasdaq) declined 3.03, or 14%, to 18.43. The trading and asset-management firm’s stock sputtered on signals of a slowdown in core trading business. December average daily trades were 953,000, falling from November, which averaged 1 million.

Walt Disney rose 60 cents, or 1.7%, to 35.85. Moody’s Investors Service placed the entertainment giant’s A3 senior unsecured long term and Prime-2 short-term ratings on review for upgrade, affecting about $10 billion of debt securities, prompted by the strengthening of the company’s operations in each of its lines of business.

CACI International plunged 7.88, or 14%, to 47.22, the Big Board’s biggest percentage decliner. The provider of information technology systems to the U.S. Defense Department and government agencies slashed its 2007 earnings outlook on an unexpected drop in business with the Pentagon and federal agencies.

Washington Mutual rose 53 cents, or 1.2%, to 44.26. The giant home lender, battling worsening credit quality in its mortgage business and a sluggish housing market, nevertheless posted a 22% increase in fourth-quarter profit, helped by a gain from the sale of its mutual-fund advisory unit.

Cablevision Systems gained 1.52, or 5.2%, to 30.77, in the top 10 among top percentage movers on the NYSE. Wachovia Securities raised shares to outperform from market perform after the company rejected the Dolan family’s $30 a share offer. Wachovia called the overture arguably too cheap in the face of expanding valuations among cable companies.

Harley-Davidson lost 1.89, or 2.6%, to 70.95. The motorcycle maker reported fourth-quarter profit that beat analysts’ expectations on strong international sales, although domestic sales rose only 0.3%.

Google (Nasdaq), which touched its all-time high of 513 on Tuesday, slid 9.45, or 1.9%, to 487.87. The Internet search engine’s hard-charging promotion of its Checkout online-payment feature is hurting the company, analysts and Internet-industry watchers say.

Jefferies Group gained 1.09, or 3.8%, to 29.44. Fourth-quarter earnings came in at $55.8 million, or 38 cents a share, handily beating analysts’ expectations for 34 cents. Revenue increased 19% to $513.3 million, boosted by strength in sales and trading, investment banking and asset management.

Vornado Realty Trust lost 2.65, or 2.2%, to 119.90 and Equity Office Properties Trust added 37 cents to 51.31. A group of real estate investors led by Vornado offered to acquire Equity Office, the country’s largest office landlord, for $52 a share, topping a previous $48.50-a-share offer by private-equity giant Blackstone Group, in a bid to become the leading office real-estate investment trust on both U.S. coasts.

J.C. Penney rose 3.97, or 5%, to 83.58. J.P. Morgan Securities upgraded shares to overweight and added them to its Focus List with a $104, June 2008, price target, seeing continued upward earnings per share revisions coupled with several positive catalysts in 2007.

UnitedHealth Group lost 1.85, or 3.3%, to 53.80. The giant health insurer reported fourth-quarter net income of $1.2 billion and a 47% increase in revenue, but lowered its forecast of enrollment growth for its Medicare Advantage plans.

Bank of New York gained 69 cents, or 1.7%, to 40.94. Fourth-quarter net income more than quadrupled, reflecting a gain on the sale of the banking company’s retail business as well as merger and integration costs.

Monster Worldwide (Nasdaq) lost 1.38, or 2.7%, to 49.41. Federal prosecutors are intensifying their criminal probe into stock-option manipulation at the parent of the Monster.com job-search Web site, The Wall Street Journal reported.

SLM Corp., commonly known as Sallie Mae, fell 2.53, or 5.3%, to 45.47. The student loan provider’s core earnings for the fourth quarter rose 15% to $326 million, or 74 cents a share, when analysts had forecast earnings of 75 cents.

Comerica gained 1.42, or 2.4%, to 59.47. The banking company’s fourth-quarter net income rose to $299 million, or $1.87 a share, from $207 million, or $1.25 a share, a year earlier.

Cisco Systems (Nasdaq) continued its 2007 slide, with a loss of 53 cents, or 2%, to 26.45, after a 60% leap last year. Shares have now fallen 8.5% over the past three sessions, with the networking giant receiving a trio of analyst downgrades as concerns grow that growth will slow in the second half of this year.

Dell (Nasdaq) fell 63 cents, or 2.4%, to 25.21. For the second consecutive quarter Hewlett-Packard was the number one vendor of personal-computers, an important business for Dell, based on worldwide shipments, according to market research firm Gartner. Hewlett-Packard declined by 15 cents to 42.34.

Teva Pharmaceutical Industries’ American depositary receipts gained 1.05, or 3.2%, to 33.93 on the Nasdaq. Goldman Sachs upgraded shares to buy from neutral, feeling the stock’s performance is set to improve as the pharmaceutical company’s focus shifts to an improving business mix and there is a reacceleration of earnings growth for 2008 and beyond.

Novartis AG’s American depositary receipts lost 1.48, or 2.5%, to 58.05. The Swiss drug maker posted a fourth-quarter net profit that was below analysts’ expectations, partly due to costs related to the recall of contact lenses which pressured earnings at the company’s consumer health division.

Avaya lost 53 cents, or 3.8%, to 13.39. UBS downgraded shares to neutral from buy, expecting solid first-quarter results but feeling the communications network developer lacks any company-specific catalysts to drive the stock higher.

International Game Technology fell 1.08, or 2.3%, to 46.10. Fiscal first-quarter net income inched up to $121 million, or 35 cents a share, from $120.6 million, or 34 cents a share last year, with the slot machine maker shipping fewer units than a year ago.

By Karen Talley, Dow Jones Newswires


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