Bearish day invades Wall Street, leaving the major market indices sharply lower. The Dow ($INDU) gave up 101.32 points on the session, closing at 10,334.16. The S&P 500 ($SPX) fell 1.04 percent to 1,128.98. The Nasdaq ($COMPQ) lost 32.24 points, or 1.57 percent, to 2,015.55. Volume was moderate at best, with the NYSE trading 1.48 billion shares and the Naz turning over 1.74 billion shares. Market breadth was negative by a 14-to-19 and 9-to-21 margin on the Big Board and Naz respectively.
A combination of earnings warnings and sub par economic news led to the decline, taking away the gains achieved following the Fed announcement Wednesday. The tech sector was especially vulnerable Thursday following warnings from Emulex (ELX) and Amkor (AMKR), as well as an analyst downgrade of Yahoo (YHOO). Shares of ELX fell 19.92 percent today to a new 52-week low. The storage network manufacturer lowered earnings and revenue forecasts for the year on lower orders from customers. Shares of Amkor suffered likewise, giving up 29.22 percent on similar news.
Shares of Yahoo (YHOO) fell 5.77 percent on the session after Smith Barney lowered its rating on the stock to “Hold” from “Buy.” The broker believes Yahoo is fairly valued at its current price. Shares of Cardinal Health (CAH) plummeted Thursday after the company lowered earnings estimates for the year and stated that the SEC is asking for further information in its investigation into Cardinal’s revenue recognition practices. CAH shares dropped 24.54 percent on volume of more than 35 million shares.
Oil prices rose to $38.74 a barrel today on concerns of terrorism. Saddam Hussein was in an Iraqi court today, denying any wrong doing. There are fears that supporters will use acts of terrorism to support the fallen leader. Construction spending rose 0.3 percent in May, but this was below expectations for growth of 0.7 percent. Nonetheless, construction spending continues to be strong. Jobless claims rose more than expected in the latest week, moving back above the 350K level. Even so, economists expect a reading near 250,000 Friday for nonfarm payrolls. The ISM Index fell slightly in June, but didn’t fall as far as some had expected following Wednesday’s large drop in the Chicago PMI index. In fact, the ISM Index came in above 60 for the eight straight month.
Overall, today’s session was anything but bullish. Volume remains on the light side, but this could change following the payrolls report tomorrow. However, we are heading into a three day weekend and this might keep traders from holding large positions, making it difficult for the stock market to see significant gains Friday.
Jody Osborne Senior Staff Writer & Options Strategist Optionetics.com ~ Your Options Education Site
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