US stocks down
A grim combination of higher oil prices and lowered outlooks from companies including Colgate-Palmolive, Unilever and The New York Times Co sent stocks sliding In New York today.
Blue chips bore the brunt of the selling.
The negative news from Colgate-Palmolive, its first profit warning in nearly a decade, and a brokerage downgrade of Citigroup put pressure on the Dow Jones industrials.
Trading was light, as many investors stuck to the sidelines ahead of a key meeting of the Federal Reserve. But analysts noted unusually strong performance among semiconductor shares despite forecasts of slower growth from chipmakers.
The Philadelphia semiconductor index surged 2.9%.
“It seems a contrarian view is developing in the tech sector.
There’s a feeling that they’re probably oversold, and as a result we’re seeing investors having second thoughts about unloading them,” said Peter Cardillo, chief strategist with SW Bach & Co.
“Unfortunately, the market as a whole is going to continue to live with this oil issue. There’s no indication prices are going to collapse anytime soon, so it will remain a daily focus.”
The Dow was down 79.57, or 0.8%, at 10,204.89, after a drop of 0.3% last week.
The broader gauges also fell. The tech-dominated Nasdaq composite index, buoyed by chip stocks early in the session, gave back those gains and closed down 2.02, or 0.1%, at 1,908.07, following a weekly gain of 0.8%.
The Standard & Poor’s 500 index shed 6.35, or 0.6%, to 1,122.20, after advancing 0.9% last week.
Energy costs and earnings outlooks have competed for investors’ focus in recent weeks, but attention returned to interest rates ahead of the Fed’s Open Market Committee meeting set for tomorrow.
Most economists agree the Fed will continue to tighten short-term interest rates at a measured pace by raising the federal funds rate another quarter of a percentage point to 1.75%.
If the Fed steps back from its policy and decides not to raise rates, the markets could interpret it as a signal the economy is not doing as well as previously hoped.
Growing anxiety about global oil supply sent crude futures higher as beleaguered Russian oil giant Yukos announced plans to stop shipments to China.
The latest event to aggravate the oil market came just days after Hurricane Ivan menaced rigs and threw tankers off course in the Gulf of Mexico, cutting daily production in the region by half. Light sweet crude for October delivery settled up 76 cents at 46.35.
Colgate-Palmolive fell 11%, or 6.10, to 48.23, after the consumer products giant warned its second-half results would be lower than expected due to higher marketing spending and rising packaging and raw material costs.
Dutch consumer products maker Unilever shed 5.2%, or 1.82, to 33.22, after reducing its outlook for the year, citing poor weather, weak consumer confidence in Europe and tough competition in Asia.
The company, which owns brands such as Lipton tea, Ben & Jerry’s ice cream and Dove soap, now expects earnings growth of less than 5% this year. It earlier forecast growth of more than 10%.
Procter & Gamble, the top US maker of household products, posted sympathetic declines, falling 1.88 to 54.38.
The New York Times lost 64 cents to 40.16 after the newspaper publisher lowered its earnings forecast for the year and warned that results for the current quarter will fall below estimates due to declining revenue growth in September.
Citigroup fell 1.55 to 45.40 days after regulators in Tokyo announced they would shut down the company’s private banking business in Japan after finding “severe legal violations.”
Japanese operations of the world’s largest financial services firm will be suspended on September 29. Merrill Lynch downgraded Citigroup to a “neutral” from a “buy.”
Chipmaker PMC-Sierra Inc. was up 39 cents at 9.86 despite reducing its third-quarter revenue forecast, citing reduced demand among Asian service providers.
Among other advancers, Nike added 1.44 to 78.00 after the world’s largest trainer and sportswear manufacturer reported strong quarterly earnings, beating Wall Street estimates by 10 cents per share.
The results reflect a 10% jump in worldwide orders, and a 12% increase in the United States.
Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange.
The Russell 2000 index, which tracks smaller company stocks, was down 2.43, or 0.4%, at 570.74.
