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Discouraging Signs Drag Trading

Wall Street: More firms indicate tough times. Concerns over a laggard business environment damp session.

July 31, 2001|From Times Wire Services

Stocks were mixed in a quiet session Monday as more companies indicated that tough times will continue for at least another quarter.

Analysts attributed the weakness to investors' unwillingness to make commitments in a business environment that shows no signs of improving soon.

The Dow Jones industrial average fell 14.95 points, or 0.1%, to 10,401.72, its second straight down session. Broader stock indexes also lagged. The Standard & Poor's 500 index dropped 1.30 points, or 0.1%, to 1,204.52, while the Nasdaq composite index fell 11.23 points, or 0.6%, to 2,017.84.

Still, advancing issues led decliners 8 to 7 on the New York Stock Exchange, although losers outpaced winners 10 to 9 on Nasdaq.

A dearth of economic data or key corporate earnings reports left trading volumes among the lightest this year in a session typical of what are often called the dog days of summer.

"It's a Monday in the summer, and we've finished up most of the earnings period," Keith Brickman, head Nasdaq trader at Morgan Stanley, told Bloomberg News. "People are in a holding pattern ahead of the economic releases."

Reports on personal income for June, weekly retail sales and consumer confidence for July are due out today and the closely watched July unemployment report will be released Friday.

Adobe Systems fell $2.52 to $40.54 after the software systems maker said it might miss third-quarter revenue targets because of the economy.

Tyson Foods was also off, dropping 52 cents to $9.88, despite beating quarterly estimates. Investors were dissatisfied with the poultry producer's indications that business remains disappointing.

But Wall Street rewarded pizza restaurant chain Papa John's for better-than-expected results, sending its stock up 75 cents to $24.75.

The companies were among the latest to report in what has been a dismal second-quarter earnings season. Investors had expected the results to be disappointing but were caught off guard by many companies' inability to say when business will improve.

Even an interest rate cut anticipated next month--which would be the seventh such move this year by the Federal Reserve--isn't expected to lift the market.

Instead, investors are looking for signs of better times ahead, such as an increase in factory orders. Some analysts say federal tax rebate checks, which began arriving in consumers' mailboxes last week, could help.

"A lot's going to depend on the next 60 days. Maybe consumers will get more confident and spend those checks and retailers will start restocking and ordering," said James Meyer, director of research at Janney Montgomery Scott.

Markets generally recover before economies do, but most expectations for this year remain low. On Monday, three influential market watchers--Doug Cliggott of J.P. Morgan Securities, Tom Galvin of Credit Suisse First Boston and Ed Kerschner of UBS Warburg--lowered their 2001 forecasts for the S&P, citing the weakness in the economy and the lack of signs that a turnaround will occur soon.

Among Monday's highlights:

* Bond prices rallied on hopes of further Fed rate cuts, driving yields on U.S. government securities to their lowest levels in almost three years. The yield on the two-year Treasury note, which moves opposite of the price, fell from Friday's close of 3.86% to 3.85% Monday--the lowest since October 1998. The benchmark 10-year note fell to 5.07% from 5.09% Friday.

* Some chip makers rose after Wit SoundView raised or repeated ratings on seven firms, including Applied Micro Circuits, up 35 cents to $16.93, and LSI Logic, up 61 cents to $21.46. Wit expects earnings to improve in the fourth quarter of 2001 or first quarter of 2002. Among chip-manufacturing-equipment makers, KLA-Tencor gained $1.33 to $55.24 and Novellus Systems climbed $1.01 to $52.65.

* Heller Financial soared $17.09 to $52.99 on news General Electric's financial unit bid $5.3 billion cash for the firm. GE, a Dow component, fell $1.05 to $43.60.

*

Market Roundup: C11-C12

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