Profit-taking sends US indices lower
US STOCKS fell yesterday as investors booked profits following a four-week rally that took the broad S&P 500 index to a 10-month high on Friday.
The drop comes ahead of an abundance of economic data due this week, including the Federal Reserve’s statement on interest rates and the economy, as well as government figures for monthly retail sales.
Materials companies’ stocks took a hit, with the S&P materials index down 1.6 per cent as a rise in the US dollar curbed investors’ appetite for commodities priced in the greenback. AK Steel fell 4.7 per cent to $20.31 while Nucor lost 4.1 per cent to $47.10.
“A number of natural resource names were perhaps overextended. We are seeing a pullback in commodity-related stocks,” said Joe Arsenio, president of Arsenio Capital Management. He said that there was also some profit taking after the market’s steep rise in the past weeks.
The Dow Jones industrial average lost 32.12 points, or 0.34 per cent, to close at 9,337.95. The Standard & Poor’s 500 Index fell 3.38 points, or 0.33 per cent, to 1,007.10. The Nasdaq Composite Index dropped 8.01 points, or 0.4 per cent, to 1,992.24.
The retail group was a weak performer in the session, with Best Buy down 5.3 per cent at $37.66 after Goldman Sachs downgraded the electronics retailer to “neutral”.
The S&P Retail index dropped 2 per cent. On Nasdaq, BlackBerry maker Research in Motion was one of the top drags, down 4.9 per cent at $73.34. The stock was down for a third-straight session after UBS downgraded it to “neutral” from “buy” on concerns that Verizon Wireless, one of RIM’s largest customers, may launch an iPhone.
On the upside, McDonald’s reported stronger-than-expected July sales, sending the Dow component’s stock up 1.9 per cent to $56.27 on the New York Stock Exchange.
Fellow Dow component Merck rose 1.7 per cent to $30.60 after the pharmaceutial stock was reinstated by Goldman Sachs with a “buy” rating, and added to its Americas conviction buy list.
The S&P healthcare index gained 0.75 per cent.
Volume was low on the NYSE, with 1.09bn shares changing hands, below last year’s estimated daily average of 1.49bn. On the Nasdaq about 1.86bn shares traded, well below last year’s daily average of 2.28bn.
Declining stocks outnumbered advancing ones on the NYSE by a ratio of 8 to 7, while on the Nasdaq, about 14 stocks fell for every 13 that rose.