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Wall St falls on economy woes, volume lowest
Source: Agencies |
August 31, 2010, Tuesday
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US stocks fell in the year's lightest volume yesterday as worries about the pace of economic recovery overshadowed data showing a rise in consumer spending and income.
The uncertainty weighed more on sectors associated with growth, including banks and consumer discretionary stocks. Bank of America fell 2.5 percent to US$12.32 while specialty retailer Nordstrom Inc tumbled 5.2 percent to US$28.72.
US consumer spending rose at the strongest pace in four months in July while a smaller rise in incomes was less than forecast. The expectation that data this week will confirm the economy shed jobs in August also kept investors at bay.
"The consumer doesn't have the capacity to grow at a big rate," said Malcolm Polley, president and chief investment officer of Stewart Capital Advisors in Indiana, Pennsylvania.
"There's no incentive for people to spend. They continue to pay down debt, and that points to slower-than-desired economic recovery."
The Dow Jones industrial average dropped 140.92 points, or 1.39 percent, to 10,009.73. The Standard & Poor's 500 lost 15.67 points, or 1.47 percent, to 1,048.92. The Nasdaq Composite fell 33.66 points, or 1.56 percent, to 2,119.97.
About 5.6 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, the slowest day for Wall Street in volume so far this year.
Chipmakers weighed on the Nasdaq after Intel Corp, down 2.2 percent to US$17.96, bid US$1.4 billion to buy the wireless unit of German chipmaker Infineon Technologies AG. The deal could reduce Intel's reliance on selling chips to personal computer makers.
The PHLX semiconductor index lost 2.5 percent, its largest drop since Aug. 11.
Shares of United Airlines parent UAL Corp rose 1.3 percent to US$20.71 and Continental Airlines ticked up 0.4 percent to US$21.89 after the two won US antitrust approval late on Friday to create the world's largest carrier. Continental and UAL expect the deal to close by Oct. 1..
In other merger-related news, US biotech company Genzyme Inc rose 3.4 percent to US$69.91 after it rejected an US$18.5 billion buyout offer from French drugmaker Sanofi-Aventis SA..
3M Co, down 1.7 percent to US$79.65, said it would buy Cogent Inc, the maker of identification systems, for US$943 million, paying a nearly 18 percent premium. Cogent shares rose 24.4 percent to US$11.09.
Hewlett-Packard Co added 1.5 percent to US$38.56 after its board approved a buy-back of US$10 billion in shares, with at least US$3 billion worth of shares to be bought in the fiscal fourth quarter..
US President Barack Obama's attempt to address worries the recovery is faltering appeared to fall short..
Obama said he had discussed additional steps to help the recovery with his advisers, but the speech did not promise any concrete measures, and stocks extended losses afterward.
Investors were also hesitant ahead of closely watched data on manufacturing, services and the August non-farm payrolls report due later in the week, which are expected to confirm the economy's growth is slowing.
Declining stocks outnumbered advancing ones on the NYSE by a ratio of about 7 to 2, while on the Nasdaq, about four stocks fell for every one that rose.
The uncertainty weighed more on sectors associated with growth, including banks and consumer discretionary stocks. Bank of America fell 2.5 percent to US$12.32 while specialty retailer Nordstrom Inc tumbled 5.2 percent to US$28.72.
US consumer spending rose at the strongest pace in four months in July while a smaller rise in incomes was less than forecast. The expectation that data this week will confirm the economy shed jobs in August also kept investors at bay.
"The consumer doesn't have the capacity to grow at a big rate," said Malcolm Polley, president and chief investment officer of Stewart Capital Advisors in Indiana, Pennsylvania.
"There's no incentive for people to spend. They continue to pay down debt, and that points to slower-than-desired economic recovery."
The Dow Jones industrial average dropped 140.92 points, or 1.39 percent, to 10,009.73. The Standard & Poor's 500 lost 15.67 points, or 1.47 percent, to 1,048.92. The Nasdaq Composite fell 33.66 points, or 1.56 percent, to 2,119.97.
About 5.6 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, the slowest day for Wall Street in volume so far this year.
Chipmakers weighed on the Nasdaq after Intel Corp, down 2.2 percent to US$17.96, bid US$1.4 billion to buy the wireless unit of German chipmaker Infineon Technologies AG. The deal could reduce Intel's reliance on selling chips to personal computer makers.
The PHLX semiconductor index lost 2.5 percent, its largest drop since Aug. 11.
Shares of United Airlines parent UAL Corp rose 1.3 percent to US$20.71 and Continental Airlines ticked up 0.4 percent to US$21.89 after the two won US antitrust approval late on Friday to create the world's largest carrier. Continental and UAL expect the deal to close by Oct. 1..
In other merger-related news, US biotech company Genzyme Inc rose 3.4 percent to US$69.91 after it rejected an US$18.5 billion buyout offer from French drugmaker Sanofi-Aventis SA..
3M Co, down 1.7 percent to US$79.65, said it would buy Cogent Inc, the maker of identification systems, for US$943 million, paying a nearly 18 percent premium. Cogent shares rose 24.4 percent to US$11.09.
Hewlett-Packard Co added 1.5 percent to US$38.56 after its board approved a buy-back of US$10 billion in shares, with at least US$3 billion worth of shares to be bought in the fiscal fourth quarter..
US President Barack Obama's attempt to address worries the recovery is faltering appeared to fall short..
Obama said he had discussed additional steps to help the recovery with his advisers, but the speech did not promise any concrete measures, and stocks extended losses afterward.
Investors were also hesitant ahead of closely watched data on manufacturing, services and the August non-farm payrolls report due later in the week, which are expected to confirm the economy's growth is slowing.
Declining stocks outnumbered advancing ones on the NYSE by a ratio of about 7 to 2, while on the Nasdaq, about four stocks fell for every one that rose.
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