The Dow Jones Industrial Average fell and benchmark indexes headed toward their third straight losing week after Honeywell International Inc cut its profit estimate and an index of consumer confidence dropped.
Signs of a slowing economic recovery added to investors' concerns over possible US military action against Iraq as President George W. Bush presses his case for a strike against Saddam Hussein.
"There's a pretty long laundry list," said Brett Crawford, who helps manage US$4.4 billion at Mesirow Asset Management in Chicago. "Recession, war, terrorist threats, the economy."
He's been buying shares of consumer companies, including Tiffany & Co.
The Dow Jones Industrial Average shed 85.86, or 1 percent, to 8,293.83 as of 2:17pm New York time Froday. Honeywell contributed more than half the drop.
The Standard & Poor's 500 Index swung between gains and losses and was down 0.07 to 886.75. Wal-Mart Stores Inc gained after the government reported retail sales rose. The NASDAQ Composite Index climbed 6.95, or 0.5 percent, to 1,286.63, led by Intel Corp. and Adobe Systems Inc.
For the week, the S&P 500 has dropped 0.4 percent, the Dow 1.1 percent and the NASDAQ 0.7 percent. Bush this week has lobbied for support to oust Hussein, saying Iraq defied UN resolutions requiring inspections for biological, chemical and nuclear weapons.
Iraqi Deputy Prime Minister Tariq Aziz today rejected the unconditional return of UN weapons inspectors.
The University of Michigan's preliminary sentiment index dropped to 86.2 this month from a final reading of 87.6 in August.
The index reading for September was the lowest since November.
"The lousy consumer confidence number today will increase people's anxiety" about corporate profits and the markets, said Gil Knight, who helps manage US$11 billion for Allied Investment Advisors Inc Allied has been buying stocks likely to hold up in a slow economy, such as PepsiCo Inc and Gillette Co, he said.
Rising and falling stocks were about even on the New York Stock Exchange and the NASDAQ Stock Market. Some 810 million shares traded on the Big Board, New York time, up 3.7 percent from a week ago.
Honeywell, the biggest maker of automated controls and aircraft-cockpit electronics, slumped US$4.32, or 15 percent, to US$24.02. It estimated full-year earnings per share of US$2 to US$2.05.
In July, Honeywell cut its forecast to as low as US$2.25.
It had the largest percentage loss in the S&P 500.
"Honeywell's earnings are a disaster," said Patrick Connors, a trader at Greenwich Prime Trading, which manages accounts for 40 hedge funds.
United Technologies Corp, another aerospace supplier, lost US$2.10 to US$59. General Electric Co, the biggest maker of jet engines, fell US$1 to US$27.
Boeing Co, the world's largest aerospace company, declined US$0.66 to US$35.79 as its machinists vote on whether to strike tomorrow for guarantees of job security and higher pensions. The S&P 500 Industrials Index, whose members include Honeywell and General Electric, slumped to a six-week low.
Lucent Technologies Inc tumbled US$0.21, or 13 percent, to US$1.44 after the biggest US telephone-equipment maker cut its fourth-quarter forecast. It expects revenue to drop as much as 25 percent from the third quarter and said it won't return to profitability until the end of its 2003 financial year.
Among other telephone-company suppliers, Corning Inc, the world's biggest maker of fiber-optic cable, dropped US$0.09 to US$1.99. JDS Uniphase Corp, the biggest maker of fiber-optic parts, declined US$0.03 to US$2.54.
Department stores rose as a government report showed retail sales climbed more than expected last month, spurred by low-interest financing for automobiles and purchases of furniture and building supplies. Sales increased 0.8 percent to US$306.2 billion, beating the forecast 0.5 percent advance.
Wal-Mart, the biggest department store operation, rose US$1.25 to US$54.37. Home Depot Inc, the world's largest home-improvement chain, added US$0.77 to US$33.25.
"The consumer is still the stalwart behind the economy," said Michael Strauss, who helps manage about US$30 billion at Commonfund in Wilton, Connecticut. "The message that's coming through and has been coming through is that if the price is right, consumers are buying."
Pepsi Bottling Group Inc gained US$1.83 to US$26.36 and Coca-Cola Enterprises Inc added US$0.63 to US$20.99. Goldman, Sachs & Co analyst Mark Cohen raised them to its "recommended list" from "market outperform."
Intel, the world's biggest chipmaker, added US$0.26 to US$15.96. Its rival Advanced Micro Devices Inc. said it's delaying the desktop personal-computer version of its Hammer chip by a few months, a setback in its push to win market share.
Adobe jumped US$1.98 to US$20.43. The world's biggest maker of graphic-design software said third-quarter profit rose, and sales fell less than forecast.
``It's a positive release out of a tech company,'' said Mark Donahoe, managing director of institutional trading at US.
Bancorp Piper Jaffray in Minneapolis. "People were expecting the numbers for next year would be coming down and they didn't."
Other software shares rose. Microsoft Corp, the world's biggest software maker, gained US$0.37 to US$47.52. Oracle Corp, which makes database software used to store and retrieve information, added US$0.21 to US$9.69.
Biogen Inc fell US$1.72 to US$32.67. The FDA will review additional information for the company's application for its Amevive psoriasis drug within six months. The regulatory agency had an option of reviewing the additional information over a shorter span of two months, Biogen said.
Baxter International Inc fell US$0.60 to US$31.99. The maker of blood treatments told the US Food and Drug Administration that tubing used in some of its dialysis machines might be linked to five patient deaths.
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