October 9: U.S. stocks extend losses

Source: Julie Rannazzisi, CBS.MarketWatch.com

New York -- The stock indexes backpedaled Tuesday as investors continued to assess the implications of the U.S. and British attacks on targets in Afghanistan, which continued overnight.

Military officials reported a “very high success rate” in these early stages of the retaliatory mission. President Bush said the first day of military action “was executed as planned.” Mike Hurley, technical analyst at SoundView Technology Group, said the market continues to send out mixed signals.

“Sentiment indicators suggest that a bottom may already be behind us while market history, as well as downside momentum, caution patience. In the end, only the market itself can ‘call the bottom’ and the resistance areas we are now approaching will be key, as will be the lows of Sept 21 -- should they see a test,” Hurley commented.

Tech stocks led on the downside after logging outsized gains in recent sessions. Chip and software issues were hit with the loftiest losses. In the broader market, airline, gold, utility and drug shares retreated as brokerage, biotech chemical and paper stocks headed north.

The Dow Jones Industrial Average fell 25 points, or 0.3 percent, to 9,042. Topping the list of losers were shares of Honeywell, Intel, Microsoft, Boeing and Eastman Kodak. Heading higher were shares of Alcoa, DuPont, Home Depot, International Paper and SBC Communications.

The Nasdaq Composite shaved 21 points, or 1.3 percent, to 1,584 while the Nasdaq 100 Index declined 18 points, or 1.4 percent, to 1,261.

The Standard & Poor’s 500 Index edged down 0.4 percent while the Russell 2000 Index of small-capitalization stocks lost 0.9 percent.

Volume came in at 176 million on the NYSE and at 296 million on the Nasdaq Stock Market. Market breadth was negative, with decliners outnumbered advancers by 14 to 10 on the NYSE and by 16 to 10 on the Nasdaq.

Sector and specific movers
Chip stocks took a breather after four straight sessions of upside moves. Bellwether Intel fell 1.8 percent while Advanced Micro Devices gained 1.7 percent. Among the equipment makers, which had a huge run on Monday, Applied materials slipped 3.5 percent, Novellus Systems 2.5 percent and KLA-Tencor 1.9 percent.

In merger news in the oil and gas sector, Burlington Resources said it agreed to buy Canadian Hunter in a $2.1 billion cash deal. Burlington will offer $53 a share in cash to acquire Canadian Hunter, a 36 percent premium from Monday’s close. Burlington gained 0.3 percent in recent action.

Financial issues recovered after taking a drubbing on Monday. Datek Online said average daily trades rose to 67,680 in September, up sequentially from August’s 57,637 but substantially lower from the 100,310 daily trades witnessed in September 2000. For the third quarter, average trades per day totaled 63,497 vs. 93,127 in the second quarter and 97,638 in the year-ago third quarter. And Datek said assets per funded account dwindled to $10,054 in the third quarter vs. 13,341 in the second quarter and $23,767 in the year-ago third-quarter. Among the online brokers, Ameritrade rose 1.3 percent while E- climbed 0.7 percent. Among the full-service brokers, Morgan Stanley added 1.1 percent, Merrill Lynch 1.4 percent and Bear Stearns 0.4 percent.

Treasury prices
Treasury sellers remained in the driver’s seat, with losses concentrated in the belly of the yield curve as 5- and 10-year notes bore the brunt of the pressure.

The 10-year Treasury note was off 14/32 to yield 4.555 percent while the 30-year government bond backpedaled ˝ to yield 5.345 percent.

Meanwhile, retail sales fell again in the latest week, according to two weekly indexes. The BTM-USBW retail index fell 0.8 percent last week following a 0.2 percent drop in the prior week. Sales were “on to below” plan, with discounters reporting stronger sales than department stores. And Instinet Redbook said its weekly index fell 2.5 percent compared with a month ago.

The market will have to wait until Friday for the week’s main economic news: the September retail sales report and the producer price index.

In the currency segment, the dollar gained 0.4 percent to 120.22 yen while the euro edged down 0.1 percent to 91.92 cents.