Stocks Fall on Profit-Taking After 3 Days of Gains
NEW YORK – Stocks fell Wednesday as investors took profits after a three-day rally that pushed the major market gauges to their highest levels in a month.
The Dow Jones industrial average (search) ended down 64.08 points, or 0.61 percent, at 10,368.44. The Standard & Poor's 500 Index (search) closed down 10.88 points, or 0.95 percent, at 1,131.30. The technology-focused Nasdaq Composite Index (search) fell 32.92 points, or 1.63 percent, to 1,990.61.
Coca-Cola (KO) led the blue-chip Dow lower as the soft drink giant said its chief operating officer, passed over for the top job in May, was leaving the company. Oil companies like Exxon Mobil Corp. (XOM) and ChevronTexaco (CVX) fell as crude oil prices stayed well below last week's highs.
On the Nasdaq, semiconductor maker OmniVision Technologies Inc.(OVTI) was the most heavily traded stock, as the company said it would delay its fourth-quarter earnings release and may have to restate some 2003 and 2004 results.
Trading was light, as it has been all week, with little economic and corporate news rolling in during the session. Most U.S. financial markets will be closed Friday for the funeral of former President Ronald Reagan (search).
"After three days of gains, we were due for a breather," said Frederic Dickson, chief market strategist at fund firm D.A. Davidson & Co. "We're seeing a little bit of consolidation. The surprise today is that the break in oil prices hasn't really generated much positive reaction."
Government officials announced late Wednesday the PPI report for May would be postponed until further notice because of difficulties in calculating the measure. A revised release date was not set, but could be no earlier than Tuesday, officials said.
With so much uncertainty, it seemed many investors were inclined to stay on the sidelines, and volume was low. Such a day "can't be used as any indication of a trend," said Neil Massa, an equity trader with John Hancock.
"It just seems like the start of the summer doldrums," Massa said. "I think once the end of the month comes, we can start to move forward. Until then we'll be trading sideways. ... I don't see any other catalyst to push us forward."
The slide came a day after Federal Reserve (search) Chairman Alan Greenspan (search) said the central bank was prepared to do whatever was necessary to ensure sustainable economic growth in the face of rising inflation and energy prices. The unusually direct statement led some on Wall Street to believe the Fed would raise rates as high as half a percentage point at its June 29-30 meeting, higher than the 0.25 percent the market has been expecting.
"Equities kind of shrugged it off yesterday; today it seems like folks are saying, 'Is inflation an issue? How far will the Fed have to go? How long will this tightening last?'" said John Caldwell, chief investment strategist for McDonald Financial Group. "Higher rates certainly will have an impact. That will be a juggling act for the stock market over the next six months."
Oil prices remained in the spotlight Wednesday, as U.S. inventory data showed a rise in crude and refined fuel product stores last week. The news had little impact on the market, however. Crude futures, which have fallen in four of the last five sessions, settled higher on the New York Mercantile Exchange, up 26 cents at $37.54 a barrel.
Dow component Coca-Cola Co. (KO) was down 85 cents at $51.76 after No. 2 executive Steve Heyer announced plans to step down after he was passed over for the top job at the world's biggest beverage maker. Heyer, the company's president and chief operating officer, will leave after a transition period of several months.
Exxon Mobil, the world's largest publicly traded oil company, fell 44 cents to $43.45, after hitting a 52-week high on Tuesday, which was propelled by higher oil prices. Meanwhile, ChevronTexaco shares slipped $1.15 to $90.
In other trading, Accenture Ltd. (ACN) fell as a U.S. House of Representatives committee passed a measure that would block the company from a $10 billion security contract because the consulting firm is not based in the United States. Its shares dropped 65 cents, or 2.5 percent, to $24.83.
Fortune Brands Inc. (FO) fell 41 cents to $74.20 after the maker of products including Jim Beam bourbon, Titleist golf equipment and Moen faucets raised its forecast for the current quarter to the top range of analysts' expectations.
Smithfield Foods Inc. (SFD) was down $1.16 at $29.05 after the nation's largest hog producer and pork processor reported sharply higher quarterly earnings, largely due to expanded operations and rising prices.
But DHB Industries Inc. (DHB) shares soared, a day after the maker of bullet-proof vests said it won a $239.4 million contract for body armor from the U.S. Army for use in Iraq. DHB shares spiked $3.24, or 35 percent, to $12.54 on the American Stock Exchange.
The Russell 2000 index, which tracks smaller company stocks, was down 9.33, or 1.6 percent, at 568.58.
Overseas, Japan's Nikkei stock average finished 0.6 percent lower Wednesday. In Europe, France's CAC-40 closed down 0.7 percent, Britain's FTSE 100 shed 0.3 percent and Germany's DAX index fell 0.5 percent.
Reuters and the Associated Press contributed to this report.