The broader stock market posted modest gains on Monday on some upbeat corporate news while the tech-laced Nasdaq sank on a sell-off in semiconductor shares. Concerns about the weak economy and the prospect of a war with Iraq dampened any enthusiasm for buying.
The Dow Jones industrial average gained 67.49 points, or 0.81%, to 8,380.18. And the broader Standard & Poor's 500-stock index finished up 1.31 points, or 0.15%, to 891.12. Meanwhile, the Nasdaq composite index fell 15.55 points, or 1.20%, to 1,275.85. Wall Street will face another quiet day on the economic data front on Tuesday. Due out are figures on U.S. industrial production and capacity utilization in August, which are not expected to be market moving. Industrial production is seen unchanged after rising 0.2% in July while capacity utilization is seen slipping to 76.0% from 76.1%.
There are a few companies scheduled to report quarterly results on Tuesday including database software company Oracle (ORCL ). Among the other companies are supermarket chain Kroger (KR ), retailer Best Buy (BBY ) and propane gas distributor Blue Rhino (RINO ).
Wall Street is in the middle of earnings warning season ahead of the release of third quarter corporate results. Profits on average are expected to rise about 11% for companies in the Standard & Poor's 500 index, according to First Call/Thomson Financial. But the market is clearly skittish about the reports.
On Tuesday, the Nasdaq was dragged down by shares of semiconductor companies. The sector was hit after a Prudential Securities analyst cut earnings estimates for Big Board-listed Texas Instruments (TXN ) and other companies in the group. The analyst also cut his price targetfor TI to $28 from $33.
Meanwhile, biotechnology concern Genzyme (GENZ ) put Wall Street on notice for the third time this year that slowing sales of its kidney disease drug Renagel would affect future results.
Worries about the toll a war with Iraq could take on the U.S. economy are keeping a lid on buying. There is fear that a U.S.-led invasion of Iraq to oust strongman Saddam Hussein would disrupt oil shipments, putting further pressure on the U.S. economy, says economic-research outfit MMS International.
The cost of a military campaign in the Gulf may run as high as $200 billion, according to a Wall Street Journal report.
In onther negative news, energy company Dominion Resources (D ), which owns Virginia's biggest utility, said 2003 profit will miss estimates because the company will sell securities to bolster its balance sheet.
But there was good news that was lifting Dow stocks. Wal-Mart (WMT ), the world's largest retailer, posted sales growth in the week ended Sept. 13 within the expected range 4% to 6% range.
Former General Electric (GE ) CEO Jack Welch announced he had renounced several controversial perks such as free use of company planes, a company apartment and other benefits after coming under fire for his lavish retirement package. Meanwhile, GE received a request for its voluntary cooperation in an informal investigation that the Securities and Exchange Commission is conducting in connection with Welch's employment and post-retirement agreements with the company.
Fast-food giant McDonald's (MCD ) was trading higher after Morgan Stanley raised its investment rating on the company to "equal weight" from "underweight." The investment bank said McDonald's stock was oversold.
And a big union at aerospace concern Boeing (BA ) said its members had turned down a call to strike. By default, the members a adopted a three-year contract even though more than half the voters opposed it.
U.S. Treasuries ended mixed with the long end doing better than the short end. MMS says increasing geo-political risks, with rising probability of a war with Iraq, are keeping a safe-haven bid in Treasuries.
In economics news, U.S. business inventories rose 0.4% in July after a 0.3% gain in June. Sales climbed 1.2%, also following a 0.3% June increase. The inventory/sales ratio dipped to 1.35 from 1.36. MMS says the data are close to expectations, with inventories a bit stronger than forecast. But the data should have little impact on the markets.
European stocks were trading mixed.
London's Financial Times Stock exchange index rose 36.30 points, or 0.91%, to 4,044.30 in short covering and bargain hunting. Some seem to be encouraged that the US seems to be winning support in putting pressure on Iraq to make changes.
Germany's DAX index shed 42.23 points, or 1.26%, to 3,319.05 after German banks see recession "rather unlikely" even though recent data been weak. MobilCom shares are higher after government pledged funds.
France's CAC index eased 14.22 points, or 0.45%, to 3,141.95.
Asian markets ended lower. Tokyo's benchmark Nikkei 225 index lost 173.30 points, or 1.84%, to 9,241.93. In Hong Kong, the Hang Seng Index tumbled 145.84 points, or 1.51%, to 9,505.13.