NYTimes_Stocks Off as Intel's Weak Forecast Overshadows Jobs
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NYTimes_Stocks Off as Intel's Weak Forecast Overshadows Jobs
Stocks Off as Intel's Weak Forecast Overshadows Jobs Data
By JONATHAN FUERBRINGER
Published: September 4, 2004
[url]NYTimes.com[/url]
Stocks were little changed outside the technology sector yesterday as investors shrugged off a new kind of surprise from the labor market: job growth for the previous month came in as forecast.
The fact that investors were not jarred by another employment surprise, as they have been almost every month this year, left the chip maker Intel to be the mover on the second-lightest trading day of the year. The company sharply lowered its revenue and profit margin projections after the market closed on Thursday.
Employment "wasn't a market-moving event for us," said David Hegarty, head of United States equity trading at Commerzbank Securities. The report was a positive factor, he said, as was the weakening of Hurricane Frances and the wrapping up of the Republican National Convention in New York "with nothing going awry."
But that news, he said, was "offset by Intel's midquarter update and a light I.S.M. number,'' a reference to a report this week from the Institute for Supply Management that showed a slight slowdown in the pace of manufacturing.
All three main market gauges were dragged lower by Intel, with the Nasdaq composite index the hardest hit, falling 1.6 percent. The Dow Jones industrial average, which finished down 30.08 points, would have been off about 18 points without Intel's 7.3 percent decline, to $20.05, down $1.58. The drop of 4.68 points in the Standard & Poor's 500-stock index would have been shaved to about 3.6 points without Intel.
Other technology stocks were also dragged lower by Intel's news, which means that the yearlong sell-off in the sector could continue. PMC-Sierra dropped 6.9 percent; Advanced Micro Devices was down 6.6 percent; Novellus Systems declined 6 percent; National Semiconductor fell 4.8 percent; and Analog Devices dropped 4.5 percent.
The dollar rallied on the jobs news, rising 0.7 percent against the euro and 1 percent against the Japanese yen.
But the rebound in jobs from a weak July was a negative for bonds, as some analysts concluded that economic growth, while moderate, is strong enough for the Federal Reserve to raise interest rates again when policy makers meet this month. The yield on the Treasury's 10-year note jumped to 4.29 percent from 4.21 percent on Thursday, as the price, which moves in the opposite direction, fell 21/32, to 9920/32.
The low trading volume for the day, which tailed off sharply in the afternoon, showed that many Wall Street players stayed away yesterday or left early for the Labor Day weekend. Trading volume yesterday, at 921.8 million shares on the New York Stock Exchange, and on Monday, at 846.9 million shares, was the lowest since the day before and after Christmas last year.
Data for cash flows into equity mutual funds show that many investors have lost their enthusiasm for stocks.
From April 2003 through April this year, $204 billion flowed into domestic equity mutual funds, an average of $15.7 billion a month, according to AMG Data Services. Since then, in the four months through August, $13.9 billion has come into these funds. And although complete August data will raise that total, the average monthly flow has plunged, to $3.5 billion, on this preliminary data. "Sentiment has virtually dried up over the summer,'' said Robert Adler, president of AMG.
Positive news on corporate earnings, which rose 25.3 percent in the second quarter and are expected to climb 14.9 percent in the third, has been overwhelmed by geopolitical concerns, said Jim Swanson, chief investment strategist at MFS Investment Management, the mutual fund company based in Boston.
He said that investors he talked to say "we just want to get past the election, we just want Iraq to calm down." And the surge in the price of oil, which neared $50 a barrel in August, "deters investors from being confident," he said. Oil prices have pulled back somewhat and settled in New York yesterday at $43.99 a barrel, down 7 cents.
The Labor Department reported before the stock market opened that 144,000 new jobs were created in August, just about matching the Wall Street forecast of 150,000, according to Bloomberg News.
This was the closest this year that the Bloomberg consensus forecast had come to the actual number. The closest before this was 23,000 for the May employment report. But the forecasters were off by 208,000 for July and off 188,000 for March. The average margin of error for the year so far is 121,000.
Although forecasters were closer to the mark this time and job growth rebounded from a sluggish 73,000 new jobs in July, some economists said that job growth was still not strong enough to support their economic growth forecasts.
"You are going to need a little more employment growth to get enough income growth to generate 3.5 percent to 4 percent growth in the gross domestic product," said David J. Greenlaw, chief United States fixed-income economist at Morgan Stanley.
At the close, the Dow was down 30.08 points, or 0.3 percent, to 10,260.20, while the S.& P. 500 slipped 4.68 points, or 0.4 percent, to 1,113.63. The Nasdaq fell 28.95 points, or 1.6 percent, to 1,844.48. For the year, the Dow is now down 1.9 percent and the S.& P. 500 is up 0.2 percent. The Nasdaq is down 7.9 percent.
Intel lowered its revenue forecast for the third quarter to $8.3 billion from $8.6 billion, down from a range of $8.6 billion to $9.2 billion. The company also lowered its forecast for its gross profit margin for the year, to 58 percent from 60 percent.
The dollar's rally left the euro valued at $1.2071, down from $1.2157 on Thursday, while the dollar rose to 110.60 yen, from 109.476.
By JONATHAN FUERBRINGER
Published: September 4, 2004
[url]NYTimes.com[/url]
Stocks were little changed outside the technology sector yesterday as investors shrugged off a new kind of surprise from the labor market: job growth for the previous month came in as forecast.
The fact that investors were not jarred by another employment surprise, as they have been almost every month this year, left the chip maker Intel to be the mover on the second-lightest trading day of the year. The company sharply lowered its revenue and profit margin projections after the market closed on Thursday.
Employment "wasn't a market-moving event for us," said David Hegarty, head of United States equity trading at Commerzbank Securities. The report was a positive factor, he said, as was the weakening of Hurricane Frances and the wrapping up of the Republican National Convention in New York "with nothing going awry."
But that news, he said, was "offset by Intel's midquarter update and a light I.S.M. number,'' a reference to a report this week from the Institute for Supply Management that showed a slight slowdown in the pace of manufacturing.
All three main market gauges were dragged lower by Intel, with the Nasdaq composite index the hardest hit, falling 1.6 percent. The Dow Jones industrial average, which finished down 30.08 points, would have been off about 18 points without Intel's 7.3 percent decline, to $20.05, down $1.58. The drop of 4.68 points in the Standard & Poor's 500-stock index would have been shaved to about 3.6 points without Intel.
Other technology stocks were also dragged lower by Intel's news, which means that the yearlong sell-off in the sector could continue. PMC-Sierra dropped 6.9 percent; Advanced Micro Devices was down 6.6 percent; Novellus Systems declined 6 percent; National Semiconductor fell 4.8 percent; and Analog Devices dropped 4.5 percent.
The dollar rallied on the jobs news, rising 0.7 percent against the euro and 1 percent against the Japanese yen.
But the rebound in jobs from a weak July was a negative for bonds, as some analysts concluded that economic growth, while moderate, is strong enough for the Federal Reserve to raise interest rates again when policy makers meet this month. The yield on the Treasury's 10-year note jumped to 4.29 percent from 4.21 percent on Thursday, as the price, which moves in the opposite direction, fell 21/32, to 9920/32.
The low trading volume for the day, which tailed off sharply in the afternoon, showed that many Wall Street players stayed away yesterday or left early for the Labor Day weekend. Trading volume yesterday, at 921.8 million shares on the New York Stock Exchange, and on Monday, at 846.9 million shares, was the lowest since the day before and after Christmas last year.
Data for cash flows into equity mutual funds show that many investors have lost their enthusiasm for stocks.
From April 2003 through April this year, $204 billion flowed into domestic equity mutual funds, an average of $15.7 billion a month, according to AMG Data Services. Since then, in the four months through August, $13.9 billion has come into these funds. And although complete August data will raise that total, the average monthly flow has plunged, to $3.5 billion, on this preliminary data. "Sentiment has virtually dried up over the summer,'' said Robert Adler, president of AMG.
Positive news on corporate earnings, which rose 25.3 percent in the second quarter and are expected to climb 14.9 percent in the third, has been overwhelmed by geopolitical concerns, said Jim Swanson, chief investment strategist at MFS Investment Management, the mutual fund company based in Boston.
He said that investors he talked to say "we just want to get past the election, we just want Iraq to calm down." And the surge in the price of oil, which neared $50 a barrel in August, "deters investors from being confident," he said. Oil prices have pulled back somewhat and settled in New York yesterday at $43.99 a barrel, down 7 cents.
The Labor Department reported before the stock market opened that 144,000 new jobs were created in August, just about matching the Wall Street forecast of 150,000, according to Bloomberg News.
This was the closest this year that the Bloomberg consensus forecast had come to the actual number. The closest before this was 23,000 for the May employment report. But the forecasters were off by 208,000 for July and off 188,000 for March. The average margin of error for the year so far is 121,000.
Although forecasters were closer to the mark this time and job growth rebounded from a sluggish 73,000 new jobs in July, some economists said that job growth was still not strong enough to support their economic growth forecasts.
"You are going to need a little more employment growth to get enough income growth to generate 3.5 percent to 4 percent growth in the gross domestic product," said David J. Greenlaw, chief United States fixed-income economist at Morgan Stanley.
At the close, the Dow was down 30.08 points, or 0.3 percent, to 10,260.20, while the S.& P. 500 slipped 4.68 points, or 0.4 percent, to 1,113.63. The Nasdaq fell 28.95 points, or 1.6 percent, to 1,844.48. For the year, the Dow is now down 1.9 percent and the S.& P. 500 is up 0.2 percent. The Nasdaq is down 7.9 percent.
Intel lowered its revenue forecast for the third quarter to $8.3 billion from $8.6 billion, down from a range of $8.6 billion to $9.2 billion. The company also lowered its forecast for its gross profit margin for the year, to 58 percent from 60 percent.
The dollar's rally left the euro valued at $1.2071, down from $1.2157 on Thursday, while the dollar rose to 110.60 yen, from 109.476.
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