By Mark Cotton, MarketWatch
Jan 10, 2006
U.S. stocks lost ground Tuesday as weaker-than-expected results from Alcoa
Inc. raised concern the fourth-quarter earnings season might not live up to
expectations, and led to some investors locking in recent gains that have
taken the market to multi-year highs.
The Dow Jones Industrial Average was down 43 points at 10,968, after
closing out Monday's session above 11,000 for the first time since June 2001.
The Nasdaq Composite Index was off 11 points at 2,307 while the S&P 500
Index dropped nearly 5 points to 1,285.
"Alcoa's results have certainly raised concern about what the fourth-
quarter earnings season holds for investors, but I do think there is also some
profit taking involved," said Robert Pavlik, portfolio manager at Oaktree
Asset Management.
On the broader market for equities, decliners outpaced advancers by 17 to
11 on the New York Stock Exchange, and by 3 to 2 on the Nasdaq.
Volume was 299 million on the Big Board, and 391 million on the Nasdaq.
Oil, bonds, dollar, gold
Crude futures edged higher as traders reacted nervously to news that Iran
has removed international seals on its nuclear facilities, with a view to
resuming research. There was further support in comments from a Chinese
official that China may buy oil to build a strategic reserve.
The benchmark February contract was up 30 cents at $63.85 a barrel in New
York trading.
Treasuries prices were lower, pushing up yields, after a strong German
sentiment survey and solid UK retail data dented enthusiasm for U.S. assets.
The benchmark last was down 4/32 at 100-29/32 with a yield of
4.39%.
The dollar was higher against the euro, and little changed against the yen
in early trading, as market participants tried to sort through conflicting
signals on whether China will diversify its currency reserves away from the
greenback.
The euro was last down 0.2% at $1.2045. Against the Japanese yen, the
greenback was flat at 114.52.
Gold futures were backing off their recent peaks. The benchmark February
contract finished Monday above $550 an ounce for the first time since early
1981, as weakness in the dollar helped spark investment demand for the metal.
Gold futures last were down $6.20 at $544.30 an ounce.
On the data front, inventories at U.S. wholesalers rose 0.4% in November,
the Commerce Department said Tuesday. The gain was in line with expectations,
according to a survey of economists conducted by MarketWatch.
Dow stocks in focus
Alcoa shares slumped 6.8% to $28.46 in early trading. The world's biggest
aluminum producer posted fourth-quarter results that fell short of analyst
expectations. The company blamed its weak earnings on a long list of
production outages, strikes and restructuring costs.
Home Depot Inc. was in focus after the home improvement giant agreed to
buy Hughes Supply, a distributor of construction, repair and maintenance
products for $3.47 billion, in a move to boost its presence in the market for
professional supplies.
Shares in Hughes Supply shot up 18% to $45.51 while Home Depot's stock
climbed 3.6% to $42.30.
United Technologies Corp., another Dow component, fell 63 cents to $56.17
after broker Credit Suisse First Boston cut its recommendation on the company
to neutral from outperform as part of wider downgrade of the multi-industry
sector.
Other stock standouts
Phelps Dodge Corp. tumbled 10% to $139.22 after the mining group slashed
its quarterly outlook, citing one-time charges linked to higher copper prices.
Guidant shares dipped 7 cents to $68.93 after the medical devices maker
said its fourth-quarter sales will be about 15% below year-earlier levels and
said it received a follow-up letter from the Food and Drug Administration
about a facility in St. Paul, Minn.
Boston Scientific Corp. and Johnson & Johnson are currently involved in a
takeover battle to acquire Guidant.
This MarketWatch news update is provided to you courtesy of Thomson
Financial.
This is Thomson Financial's Market Commentary, which is issued three times
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The information herein is believed to be true and accurate. We take no
responsibility for inaccurate information and reserve the right to update our
reports. If you have any questions please e-mail James Sang at
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SOURCE Thomson Financial Corporate Group
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