Wall St falls on economy woes, volume lowest

Wall St falls on economy woes, volume lowest
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First Published: Tue, Aug 31 2010. 02 45 AM IST
Updated: Tue, Aug 31 2010. 11 36 AM IST
New York: US stocks fell in the year’s lightest volume on Monday as worries about the pace of economic recovery overshadowed data showing a rise in consumer spending and income.
The uncertainty weighed more on sectors associated with growth, including banks and consumer discretionary stocks. Bank of America fell 2.5% to $12.32 while specialty retailer Nordstrom Inc tumbled 5.2% to $28.72.
US consumer spending rose at the strongest pace in four months in July while a smaller rise in incomes was less than forecast. The expectation that data this week will confirm the economy shed jobs in August also kept investors at bay.
“The consumer doesn’t have the capacity to grow at a big rate,” said Malcolm Polley, president and chief investment officer of Stewart Capital Advisors in Indiana, Pennsylvania.
“There’s no incentive for people to spend. They continue to pay down debt, and that points to slower-than-desired economic recovery.”
The Dow Jones industrial average dropped 140.92 points, or 1.39%, to 10,009.73. The Standard & Poor’s 500 lost 15.67 points, or 1.47%, to 1,048.92. The Nasdaq Composite fell 33.66 points, or 1.56%, to 2,119.97.
About 5.6 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, the slowest day for Wall Street in volume so far this year.
Chipmakers weighed on the Nasdaq after Intel Corp, down 2.2% to $17.96, bid $1.4 billion to buy the wireless unit of German chipmaker Infineon Technologies AG. The deal could reduce Intel’s reliance on selling chips to personal computer makers.
The PHLX semiconductor index lost 2.5%, its largest drop since 11 August.
Shares of United Airlines parent UAL Corp rose 1.3% to $20.71 and Continental Airlines ticked up 0.4% to $21.89 after the two won U.S. antitrust approval late on Friday to create the world’s largest carrier. Continental and UAL expect the deal to close by 1 October.
In other merger-related news, US biotech company Genzyme Inc rose 3.4% to $69.91 after it rejected an $18.5 billion buyout offer from French drugmaker Sanofi-Aventis SA.
3M Co, down 1.7% to $79.65, said it would buy Cogent Inc, the maker of identification systems, for $943 million, paying a nearly 18% premium. Cogent shares rose 24.4% to $11.09.
Hewlett-Packard Co added 1.5% to $38.56 after its board approved a buy-back of $10 billion in shares, with at least $3 billion worth of shares to be bought in the fiscal fourth quarter..
US President Barack Obama’s attempt to address worries the recovery is faltering appeared to fall short..
Obama said he had discussed additional steps to help the recovery with his advisers, but the speech did not promise any concrete measures, and stocks extended losses afterward.
Investors were also hesitant ahead of closely watched data on manufacturing, services and the August non-farm payrolls report due later in the week, which are expected to confirm the economy’s growth is slowing.
Declining stocks outnumbered advancing ones on the NYSE by a ratio of about 7 to 2, while on the Nasdaq, about four stocks fell for every one that rose.
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First Published: Tue, Aug 31 2010. 02 45 AM IST
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