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Dow ends 5 days of gains as techs drag Wall St down

Dow ends 5 days of gains as techs drag Wall St down
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First Published: Thu, Sep 23 2010. 08 59 AM IST
Updated: Thu, Sep 23 2010. 08 59 AM IST
New York: US stocks slipped on Wednesday, ending the Dow’s five-day winning streak, following Adobe’s discouraging revenue outlook and investors’ disappointment over Microsoft’s new dividend.
Investors also weighed the impact of the Federal Reserve’s statement on Tuesday, which indicated the central bank was edging closer to pumping hundreds of billions of new dollars to stimulate the sluggish economy.
Adobe Systems Inc slid 19% to $26.67 and was the biggest drag on the S&P 500 and Nasdaq a day after it forecast lower-than-expected revenue, citing weak demand. Analysts slashed their ratings on the software maker.
Microsoft Corp was the Dow’s top decliner, falling 2.2% at $24.61. The company raised its quarterly dividend and is set to pay out about $5.5 billion in annual dividends to shareholders, but the move fell short of some investors’ expectations.
“They wanted either a higher payout or a more concrete use for the cash,” said Andy Fitzpatrick, director of investments at Hinsdale Associates in Hinsdale, Illinois. “This is a matter of using the cash they have to their advantage and they don’t have any measure in place to execute that.”
The Fed’s cautious statement in the previous session, which hinted that the US central bank may embark on a new round of monetary stimulus, unsettled some investors who had become more optimistic about the economy as stocks rallied to a four-month high.
“The Fed’s comments were a double-edged sword. On one hand, they’re concerned about the economy, but on the other hand they might do something stimulative. Stocks could go either way,” said Thomas Villalta, portfolio manager for Jones Villalta Asset Management in Austin, Texas.
The Dow Jones industrial average dipped 21.72 points, or 0.20%, to 10,739.31. The Standard & Poor’s 500 Index slipped 5.50 points, or 0.48%, to 1,134.28. The Nasdaq Composite Index lost 14.80 points, or 0.63%, to 2,334.55.
The Dow’s loss was limited by Alcoa Inc, which surged 4.8% to $11.70 a day after a steep sell-off.
The S&P 500 has rallied almost 9% in the last three weeks, hitting a four month-high on Monday and breaching a strong technical resistance level as improved economic data suggested the economy might not slide back into recession as some had feared.
US gold futures hit a record near $1,300 per ounce and the price of the 30-year US Treasury bond ended up almost a full point as its yield slid to a three-week low on hopes the Fed may increase its purchases of Treasuries as part of a second round of quantitative easing. The Arca Gold Bugs index rose 1%.
“The most notable market action today is in bonds and gold, and that shows the market taking into account the Fed’s unexpected view that it might need to take action to stimulate the economy,” said Nicholas Colas, chief market strategist at the New York-based ConvergEx Group.
In other downbeat corporate news, chipmaker PMC-Sierra Inc cut its third-quarter revenue outlook and forecast gross margins at the lower end of its expectations, driving its stock down 6% to $7.32.
Online retail site operator eBay Inc fell 1.6% to $24.34 after it eliminated the likelihood that its third-quarter profit would beat analysts’ expectations.
On the upside, both General Mills Inc and CarMax Inc reported quarterly profits that beat expectations.
General Mills rose 2.7% to $36.63 while CarMax advanced 8.5% to $26.16.
In world markets, Asian indices ended mixed, while European markets ended lower.
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First Published: Thu, Sep 23 2010. 08 59 AM IST
More Topics: Markets | Global | US | Stocks | Wall Street |