Stocks fell today as technology stocks led the market down amid negative comments about the prospects for computer-chip makers and related companies, including Applied Materials.
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The Nasdaq composite index fell 55.66, or 2.67 percent, to 2,029.13, according to the latest data, while the Dow Jones industrial average dropped 66.94 points, or 0.64 percent, to 10,472.12. The benchmark Standard & Poor's 500 index lost 13.23 points, or 1.09 percent, to 1,202.45.
"Reality has hit this group on a shorter-term basis, and the optimism that may have prevailed vis-a-vis an earlier turnaround was at least diminished if not extinguished by these latest pronouncements," said Ned Riley, chief investment strategist at State Street Global Advisors.
Report Lowers Sentiment
Art Hogan, chief market analyst at Jefferies & Co., said brokerage Wit Soundview was one of the purveyors of bad news on the semiconcductor companies. Hogan said a research note from the firm reflected bearish comments by officials of chip equipment maker Applied Materials at the Semicon West meeting in San Francisco.
Applied Materials, a maker of equipment used to make semiconductors, fell 9.5 percent, or $4.41, to $41.95. The company met with analysts at the industry conference, but the company was not available to comment on the proceedings.
"The Wit Soundview report was basically a confirmation of what the AMAT [Applied Materials] officials had said and that was basically that there still seems some softness into next year in this space," Hogan said.
Amid worries around the Applied Materials conference and analyst comments, "there's negative concern about the group," said Tim Grazioso, manager of Nasdaq trading for Cantor Fitzgerald & Co.
Elsewhere, investors got earnings reports from some of the 1,500 companies set to hand in their scorecards this week, including a mixed bag of results from financial services heavyweights like Citigroup and The Bank of New York.
Citigroup rose 29 cents to $49.15 and Bank of New York tumbled nearly 13 percent, or $6.40, to $43. Bank of New York, parent of one of the oldest U.S. commercial banks said its
profits rose 8 percent, put predicted future earnings could fall slightly short of expectations if weak stock-market conditions persist.
Satellite service provider Hughes Electronics Corp., which warned last month that it would add significantly fewer customers than expected in the second quarter, reported lower cash flow from operations for the period and cut its outlook for the full year. Its shares tumbled $1.50 to $18.95.
A big decliner was drugmaker Pharmacia Corp. which fell more than 8 percent, or $4.19 to $42.66. The company said after Friday's close it will supply extra clinical data to the U.S. Food and Drug Administration, which found deficiencies in Pharmacia's application for its pain management drug, parecoxib sodium.
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The Commerce Department issued May business inventory figures that showed an unchanged reading. The market, analysts said, is likely to take this somewhat negatively as economists on average were expecting a decline of 0.1 percent. The government also revised its April reading to a decline of 0.2 percent, compared with a previous reading of unchanged.