Stocks Slip in Thin Trading; Some Tech Issues Gain

NEW YORK – Stocks slipped Monday amid very light trading volumes, with only a handful of technology stocks rising.

Analysts said Wall Street was holding off on making any big moves until Wednesday, when the government releases data showing the economy's growth rate.

Wall Street could be in for a thin and choppy market all week as many investors leave town early ahead of the long Labor Day weekend.

The Dow Jones industrial average dropped 40.82 points to 10,382.35, while the Nasdaq Composite Index ended 4.39 points lower at 1,912.41.

The broader Standard & Poor's 500 Index slipped 5.71 points to 1,179.22. The Philadelphia Stock Exchange semiconductor index, however, posted a gain of 2.6 percent, to close at a level unseen in nearly three weeks.

"Some people are coming back to tech. Recently people were selling off tech and going into financials, now we see the opposite," said Ahmet Okumus, manager of the $400 million, Okumus Opportunity Fund. "The long-term outlook for tech is good, although short-term, for the next one or two quarters it is cloudy."

On Friday, major market indexes posted their biggest gains in more than six weeks as investors grasped at any signs the economy and corporate profits were ready to emerge from their slump. The Dow jumped 194.02 points, or 1.9 percent, to 10,423.17 — its biggest rally since July 12. Only three stocks of the average's 30 fell. The S&P added 22.84 points to finish at 1,184.93.

"I don't think we're going to have a clear direction until we have a turnaround in earnings, so we're just mulling around, waiting for portfolio managers to get back from vacation,'' said John Davidson, chief investment officer at Circle Trust Co, which oversees $8 billion.

The latest economic data offered little support, after the National Association of Realtors reported sales of U.S. existing homes fell 3 percent in July, as the slowing economy sapped demand.

More layoffs stung the market after farm equipment maker Deere & Co. said it would could close several plants and cut 1,975 more jobs, bringing total layoffs to 3,225. Deere fell 11 cents to $43.84.

Microsoft Corp.'s stock rose 95 cents to $63, or 1.5 percent. The software giant reiterated that it plans an initial shipment of 600,000 to 800,000 units of Xbox consoles when it launches the new system on Nov. 8 in the United States. The company said earlier it would delay the Japanese launch of its Xbox game console to Feb. 22 from the original plan for a debut late this year.

Intel Corp., another Dow stock traded on Nasdaq, rose 54 cents to $29.62. The world's No. 1 maker of microchips began selling a processor that runs at two billion cycles per second, marking a doubling of the speed of computer chips in only 18 months.

But among other heavily traded stocks on Nasdaq, Cisco lost 15 cents at $18.10 and Sun Microsystems was down 37 cents at $14.60.

Among telecom sector firms, Lucent Technologies rose 39 cents to $7.41, or more than 5.5 percent.

Home Depot Inc., the world's largest home-improvement retailer and a Dow stock, took a hit in the wake of the homes report, falling $1.11 to $48.83.

More layoffs stung the market after farm equipment maker Deere & Co. said it would could close several plants and cut 1,975 more jobs, bringing total layoffs to 3,225. Deere fell 2 cents to $43.93.

Blockbuster Inc. sank 6.4 percent after financial newspaper Barron's reported the growth of video on demand over the Internet may slow video rental and long-term gains in the stock price are likely in the past. Its stock was off $1.40 at $20.55.

The latest economic data offered little support, after the National Association of Realtors reported sales of U.S. existing homes fell 3 percent in July, as the slowing economy sapped demand.

While the magnitude of Friday's rally raised hopes that the market has finally hit a key trough after more than a year of steady pummeling, some traders were doubtful that the gains will mark the beginning of a sustained upswing.

"I still think the line of least resistance is down," said James Volk, co-director of institutional trading at D.A. Davidson & Co.

"Most people are convinced the market's not going to rally until we get some visibility in terms of earnings and the economic outlook and we're certainly not going to get that in the last week of August," Volk added.

The Russell 2000 index fell 1.88 to 478.93.

Overseas, the technology-sensitive Nikkei stock index climbed nearly 1 percent, just days after jitters over dwindling corporate profits send the index to lows unseen since October 1984.

Technology and telecommunications shares set the pace in Europe. Deutsche Telecom dashed higher amid relief that a portion of the 232 million shares that will be unleashed on the market from September had already been placed.

Germany's DAX index gained 0.4 percent and France's CAC-40 dropped 0.2.

Reuters and the Associated Press contributed to this report.