US STOCKS-Confidence data hits market; Nike rises late
Tue Sep 29, 2009 5:21pm EDT
* Consumer confidence falls, tempering optimism
* Higher home prices boost homebuilder stocks
* Dow off 0.5 pct; S&P 500 off 0.2 pct; Nasdaq off 0.3 pct
* For up-to-the-minute market news, click [STXNEWS/US] (Updates with Nike results in seventh paragraph, adds volume)
By Ellis Mnyandu
NEW YORK, Sept 29 (Reuters) – U.S. stocks fell on Tuesday as a surprise drop in a gauge of consumer confidence overshadowed signs of stabilization in housing and solid earnings from Walgreen Co (WAG.N: Quote, Profile, Research, Stock Buzz).
With the third quarter drawing to a close, trading was volatile and volume light.
Stocks started higher but then turned lower as the Conference Board’s Consumer Confidence Index for September fell, underscoring concerns about personal finances amid the worst job market in 26 years. For details, see [ID:nN29136250].
Even so, investors were reluctant to sell, and trading shifted between small losses and break-even for most of the session following Monday’s rally when the S&P 500 index rebounded to snap a three-day losing streak.
“You had a bit of mixed economic data and the market is a little bit mixed too,” said Cleveland Rueckert, market analyst at Birinyi Associates Inc in Stamford, Connecticut. “There were big gains yesterday, so it’s not surprising to see a little bit of a pullback.”
The Dow Jones industrial average .DJI dropped 47.16 points, or 0.48 percent, to 9,742.20. The Standard & Poor’s 500 Index .SPX shed 2.37 points, or 0.22 percent, to 1,060.61. The Nasdaq Composite Index .IXIC dipped 6.70 points, or 0.31 percent, to 2,124.04.
After the bell, Nike Inc (NKE.N: Quote, Profile, Research, Stock Buzz) posted a quarterly profit that beat Wall Street’s forecasts, sending its stock up 4 percent. Nike shares had ended the regular session up 1.9 percent at $60.09. [ID:nN29166196].
Major drags included some of the stellar performers in Monday’s runup, including manufacturer 3M Co (MMM.N: Quote, Profile, Research, Stock Buzz), off 1.4 percent to $73.94 and network equipment maker Cisco Systems Inc (CSCO.O: Quote, Profile, Research, Stock Buzz), down 1.3 percent at $23.30. Apple Inc (AAPL.O: Quote, Profile, Research, Stock Buzz) declined 0.4 percent to $185.38.
The semiconductor index shed 1.4 percent after rising 2.1 percent on Monday.
Retreating oil prices weighed on energy shares, with Chevron (CVX.N: Quote, Profile, Research, Stock Buzz) off 1.1 percent at $70.91. U.S. front-month crude CLc1 settled down 13 cents at $66.71 a barrel.
But shares of Walgreen jumped 9.2 percent to $37.35 after the largest U.S. drugstore chain reported a quarterly profit that topped expectations. The S&P food & drug retail industry index rose 1.6 percent. [ID:nN29508139]
An improved S&P/Case-Shiller home price index reading that hinted at stabilization in the housing market lifted the Dow Jones home construction index .DJUSHB up 0.5 percent during the regular session.
Shares of Moody’s Corp (MCO.N: Quote, Profile, Research, Stock Buzz) and The McGraw-Hill Companies Inc (MHP.N: Quote, Profile, Research, Stock Buzz) jumped after Piper Jaffray analysts said the rating agencies were in a favorable position as debt issuance improved substantially in September year-over-year.
Moody’s jumped 10.9 percent to $20.81 on the NYSE and McGraw-Hill, parent of Standard and Poor’s, rose 7.3 percent to $26.11.
Window dressing — when fund managers sell laggards in favor of outperformers to spruce up portfolios — tends to make quarter-end trading volatile.
The S&P 500, up 15.4 percent so far this quarter, is making a run for its best quarterly performance since the fourth quarter of 1998. The benchmark index has rallied nearly 60 percent from the 12-year low of early March.
A year ago on Tuesday the Dow suffered its biggest slide ever when it plunged 778 points after U.S. lawmakers first rejected a $700 billion financial bailout.
Volume was light, with about 1.18 billion shares changing hands on the New York Stock Exchange, below last year’s estimated daily average of 1.49 billion. On the Nasdaq, about 2.10 billion shares traded, below last year’s daily average of 2.28 billion.
Declining stocks outnumbered advancing ones by a ratio of about 8 to 7 on the NYSE, while on Nasdaq, about seven stocks fell for every five that rose. (Editing by Kenneth Barry)
Japan’s Factory Output Rises 1.8%, Sixth Monthly Gain (Update1)
By Jason Clenfield and Tatsuo Ito
Sept. 30 (Bloomberg) — Japanese manufacturers increased production for a sixth month in August, capping the longest winning streak in 12 years, as emergency spending by governments worldwide rekindled global trade.
Factory output rose 1.8 percent last month after climbing 2.1 percent in July, the Trade Ministry said today in Tokyo. Economists surveyed by Bloomberg forecast a 1.8 percent gain.
Output has rebounded since a record collapse in the first quarter of the year left half the nation’s factory capacity sitting idle. The gains in production since March have yet to generate employment, trigger capital investment or return companies like Toyota Motor Corp. to profit.
“We’re not going to fall back into recession, but these production increases don’t bring us back to where we started,” said Yoshiki Shinke, senior economist at Dai-Ichi Life Research Institute in Tokyo. “You’ve still got a lot of excess capacity.”
The Bank of Japan this month raised its assessment of the economy, saying it’s “showing signs of recovery.” Governor Masaaki Shirakawa tempered his policy board’s optimism by warning that the forces driving the rebound — inventory restocking and government stimulus — may only be temporary.
The yen’s 7 percent appreciation against the dollar in the past quarter may have also slowed the production recovery. Companies including Toyota are raising output at factories abroad, rather than at home, in part to avoid currency losses.
Offset the Currency
“We try to build as many vehicles as possible wherever we can. One of the key reasons is to offset the currency,” said Tokyo-based spokesman Paul Nolasco.
Toyota said last month it will shut an assembly line at one of its domestic plants next year and shift some engine production to a factory in Alabama. The automaker increased global production 4.7 percent in August from a year earlier, while domestic output was still 23.8 percent lower.
Even with the month-on-month gains in production, Japanese manufacturers are producing 18.7 percent fewer goods than a year ago, putting pressure on companies to forego investment and cut jobs.
The central bank’s quarterly Tankan survey of business sentiment, due tomorrow, is expected to show companies remain reluctant to invest. Large firms plan to cut capital spending by 9 percent this year, little changed from estimates made three months ago as the nation was emerging from recession, economists forecast.
“Like the BOJ, corporate executives are also aware that current improvements might not be sustainable,” said Tetsuro Sugiura, chief economist at Mizuho Securities Research Institute in Tokyo. “There’s no need to expand capacity right now. Company’s will wait and see to what degree the world economy resumes growth.”
Still, Japan’s export markets are showing signs of picking up. Overseas shipments increased 6.1 percent last month in volume terms, according to calculations by the Cabinet Office that strip out the yen’s gains. Exports to the U.S. rose 4.6 percent and sales to Asia climbed 10.2 percent.
Nippon Steel Corp. restarted one of two idled furnaces last month to help fill orders from China, where a 4 trillion yuan ($585 billion) stimulus package is funding construction projects and fueling economic growth. Sharp Corp. says subsidies to encourage spending on household appliances will help boost its China sales about 3 percent this year.