Soft Economy Weighs on Investors
N E W Y O R K, May 7, 2001 -- Stocks fell modestly as investors cashed in recent gains against the background ofongoing uncertainly about the direction of the U.S. economy.
Throughout the session, major stock indexes hovered nearunchanged, lacking any significant economic data. Trading was largely was confined to individual issues.
The Dow Jones industrial average fell 16.07 points,or 0.15 percent to end at 10,935.17, according to the latestdata, while the Nasdaq composite index lost 18.15points, or 0.83 percent, at 2,173.38. The benchmark Standard &Poor's 500 index slipped 3.13 points, or 0.25 percent, to1,263.48.
Some traders opted to lock in profits during Monday'ssession, after the recent run, amid a dearth of new economicdata and especially as the uncertainty lingers over the healthof the world's largest economy.
But helping sentiment are mounting hopes of more aggressiveFed monetary easing. U.S. bond dealers are almost unanimous inforecasts the central bank will slash short-term rates byanother half percentage point to 4 percent at its meeting onMay 15, according to a Reuters poll.
The mounting rate hopes lifted the market on Friday,despite news that the economy lost jobs in April at the fastestrate in a decade.
"The market is bland today. It will take sometime fordirection so I think it will be quiet for the rest of the day,"said Tom Sparico, stock trader at Bengal Partners in Stamford,Conn. "But after the (surprisingly weak) employment report (onFriday) … the market is feeling it will see further Fedeasing, probably 50 basis points," he said. "And that suggestslonger term that the equity market will be in better shape."
Corporate News
Dow stock component JP Morgan Chase & Co. lost 73cents $49.87 after Prudential lowered its rating on thefinancial powerhouse, saying the slower economy should causeproblem loans to continue to increase. Financial AmericanExpress Co. also continued to drag on the Dow.
Lucent Technologies Inc. , the most active issue onthe New York Stock Exchange, lost 60 cents at $10.55. The telecom gear maker ousted its chief financial officer.
Top Web gear maker Cisco Systems Inc., which isdue to report its results after Tuesday's close, was off 11cents at $19.53. Cisco was Nasdaq's most active.
Transmeta Corp., a start-up computer chip maker,fell $3.17 to $11.4 when a majority of its shares were freedfrom trading restrictions related to the company's initialpublic offering last November. Toshiba Corp., the world'sbiggest maker of laptop computers, will use Transmeta's Crusoemicroprocessor to power one model in its lineup of Librettonotebooks.
Also dragging on Nasdaq, Portal Software dropped$3.29 to $5.99 after the software provider cut its revenue andearnings outlooks. Portal said it would undertake cost-cuttingmeasures including job cuts and consolidation.
The energy sector was in focus on news of two takeoverdeals in the works.
Ultramar Diamond Shamrock Corp. bolted up $7.84 to$50.55 in active Big Board trade after Valero Energy Corp.
agreed to buy Ultramar for about $4 billion, creatingthe No. 2 U.S. refiner. Valero lost $2.90 at $42.57.
Williams Cos Inc. fell $3.07 to $38.60 after theenergy company said it is in advanced talks to buy BarrettResources Corp for $2.5 billion, topping a hostile bidfrom Royal Dutch/Shell Group. Barrett rose 3.6percent, or $2.47 to $69.77.
Express package shipping giant FedEx Corp lost 95cents at $40.33. Battered by a slowdown in the economy, thecompany issued another profit warning for its fiscal fourthquarter and said fiscal first-quarter earnings would likelyfall "significantly" below the previous year's results.