US stocks slumped on Friday after consumer sentiment deteriorated unexpectedly this month, stirring fears Americans may shut their wallets and prompting investors to lock in profits after three days of gains.
The benchmark S&P 500 ended the week nearly flat.
"There's some profit taking going on because we had a very nice run-up. There's nothing unusual about it," said Tim Heekin, director of trading at Thomas Weisel Partners in New York. "The path of least resistance is still up. Net equity inflows have turned positive year to date, and clearly we see institutional money being put to to work."
Since hitting this year's lows on March 11, the Dow has risen about 21 percent, the S&P 500 has gained 23 percent and the NASDAQ has added about 28 percent.
The Dow Jones industrial average fell 79.43 points, or 0.86 percent, to 9,117.12 on Friday. The broader Standard & Poor's 500 Index dropped 9.90 points, or 0.99 percent, to 988.61.
The technology-laced NASDAQ Composite Index was down 27.13 points, or 1.64 percent, at 1,626.49, based on the latest data.
Although economists had forecast a gain in the University of Michigan index of consumer sentiment, it fell to 87.2 this month from last month's 92.1.
More worrisome, the reading on consumers' outlook on the economy's future slumped to 84.2 this month from 91.4 last month, suggesting Americans find it hard to sustain the optimism that followed the end of the Iraq war.
Consumer confidence is viewed as a precursor to consumer spending, which drives two-thirds of the US economy.
"My view of this is it's healthy profit-taking and consolidation," said Gary Wedbush, head of trading at Wedbush Morgan.
"Markets don't go straight up. There's always something out there to assign a pullback to and the main one would be consumer confidence coming in lighter than expected," he said.
Volume was active, with about 1.26 billion shares changing hands on the New York Stock Exchange and about 1.82 billion traded on NASDAQ. Decliners outnumbered advancers by about 2 to 1 in both markets.
For the week, the Dow gained 0.60 percent, the S&P 500 edged up 0.09 percent and the NASDAQ dipped 0.06 percent.
Weighing on NASDAQ, Adobe Systems fell 12 percent, a day after the software maker forecast third-quarter results would be down from the second quarter. Shares sank US$4.43 to US$31.55. It was among NASDAQ's most actives.
Cree Inc. also weighed on NASDAQ after it said Eric Hunter, a founder of the semiconductor maker, filed a US$3 billion suit against the company and chairman Neal Hunter, his brother, charging they broke securities laws and threatened his family. Cree dropped 18.5 percent, or US$4.11, to US$18.10.
Intel Corp slid after Deutsche Securities cut its rating on the stock to "hold" from "buy," citing a lack of further near-term factors to drive its stock price higher and large recent gains racked up by semiconductor stocks. Intel fell 3.5 percent, or US$0.781, to US$21.359.
Among NASDAQ's most active names was the world's No. 2 software maker, Oracle Corp, which had better-than-expected earnings and offered a positive outlook. Oracle, locked in a hostile takeover bid for rival PeopleSoft Inc, rose 1.1 percent, or US$0.15, to US$13.48.
Shares of telecom equipment maker Lucent Technologies Inc were among the Big Board's big movers after The Wall Street Journal reported that US securities regulators have informed two former executives they may be subject to civil action related to aggressive sales tactics used three years ago. Lucent's stock fell 3.6 percent, or US$0.08, to US$2.14.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure