NEW YORK – Stocks fell in anemic volume Monday as many players fled the city before the Labor Day holiday and as the remaining investors, disappointed by a mixed consumer income report, refused to enter the market.
The Dow Jones industrial average (search) ended down 70.35 points, or 0.69 percent, at 10,124.66, according to the latest available figures. The Standard & Poor's 500 Index (search) closed down 8.50 points, or 0.77 percent, at 1,099.27. The tech-heavy Nasdaq Composite Index (search) was off 25.53 points, or 1.37 percent, at 1,836.56.
Trading volume was the lightest so far this year, acoording to the New York Stock Exchange (search).
Corporations provided little positive news. Semiconductor makers were particularly hit by the sell-off. Intel Corp. (INTC), the world's largest chip maker, was nearly 2 percent lower before its midquarter business update on Thursday, which will be closely watched for signs of weak back-to-school computer sales.
Microsoft Corp. (MSFT) weighed on major stock indexes and was the most actively traded on Nasdaq. On Friday, the software company said the next version of its operating system won't launch until 2006, and it scaled back plans for a key feature.
Tyson Foods Inc. (TSN), the largest U.S. meat company producing beef, pork and chicken, cut its 2004 forecast and was one of the top percentage losers on the New York Stock Exchange.
"There's not a lot of resistance here, and you're seeing a little bit of profit taking," said Todd Leone, managing director of equity trading at SG Cowen Securities. "There really isn't any news, and everybody seems to be on vacation."
While investors were cheered by the Commerce Department's (search) report of a strong rise in consumer spending for July, growth in consumer incomes was nearly flat.Combined with oil prices that are still unusually high, the data called into question whether the uptick in stocks of the last few weeks was sustainable.
"There's not a lot of resistance here, and you're seeing a little bit of profit taking," said Todd Leone, managing director of equity trading at SG Cowen Securities. "There really isn't any news, and everybody seems to be on vacation."
On Friday, the Labor Department (search) releases its employment report for August. Economists expect 160,000 jobs were added to the payroll during the month, up sharply from last month's report which showed anemic job growth of just nonfarm payroll 32,000 jobs in July.
If Friday's report shows weaker-than-expected numbers, the Federal Reserve (search) may not be tempted to raise interest rates further, a move that would boost U.S. stocks.
But with stock trading volume so light, traders were unwilling to read too much into the fall in prices. Volume on the New York Stock Exchange and the Nasdaq matched Friday's, which was the lightest day so far of the year.
"There really is not much going on, but there's been slightly more negative news than positive news," said Rick Meckler, president of investment firm LibertyView Capital Management. "A lot of traders picked this week to take off with the convention in town and all the transportation problems."
Oil prices moved lower after rising earlier as supply worries resurfaced due to more sabotage attacks on Iraqi pipelines. October crude settled down 90 cents, or 2.1 percent, at $42.28 a barrel on the New York Mercantile Exchange (search), coming back from an earlier drop to $41.30.
Among shares weighing on the Nasdaq were chip makers, which had bounced higher on Friday. Altera Corp. (ALTR) fell 20 cents to $19.10, a 1 percent fall, while Texas Instruments (TXN) fell more than 3 percent, down 69 cents to $19.65. Intel was down 39 cents at 21.63. In a preview ahead of the update, Citigroup Smith Barney said there was a risk that Intel could notch down its revenue forecast during a midquarter update on Thursday.
Microsoft also weighed, falling 14 cents to $27.32. The software company said on Friday the next version of its operating system won't launch until 2006, and it scaled back plans for a key feature.
"Tech in general is getting beat up pretty badly. But there's no rhyme or reason today," said Brian Williamson, vice president, equity trading, The Boston Co. Asset Management
The first of what could be many corporate earnings warnings were issued Monday. Tyson Foods Inc. (TSN) dropped $1.36 to $16.37 after the meat producer reduced its 2004 earnings outlook, citing slow demand and problems with the company's grain hedging activities. Earnings before one-time charges will be between $1.26 and $1.33 per share — analysts had forecast $1.45 per share.
Accredo Health Inc. (ACDO), a specialty pharmacy management company, met its fourth-quarter earnings targets, but said its 2005 growth would be less than Wall Street expected. Accredo was down $6.71 at $21.09.
Oracle Corp. (ORCL) slipped 19 cents to $10.10 after Wells Fargo cut its 2005 earnings forecasts for the business software maker. The brokerage nonetheless reiterated a "buy" on Oracle.
The Russell 2000 index of smaller companies was down 4.44, or 0.8 percent, at 547.23.
Overseas, Japan's Nikkei stock average fell 0.2 percent. In Europe, Germany's DAX index and France's CAC-40 both slipped 0.3 percent for the session. Britain's exchanges were closed for a holiday.
Reuters and the Associated Press contributed to this report.
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