MARKET SNAPSHOT Mideast tensions, earnings concerns take a toll Technology shares lead the sell-off, sending the Nasdaq to a one-month low E-mail | Print | RSS Feed | Disable live quotes By Mark Cotton & Leslie Wines, MarketWatch Last Update: 4:56 PM ET Jul 12, 2006
NEW YORK (MarketWatch) -- U.S. stocks ended sharply lower Wednesday, with the Nasdaq Composite at its worst level in a month, as worsening political tensions in the Middle East weighed heavily on a market already unsettled by a poor start to the second-quarter earnings season. The Nasdaq ($COMPQ : Nasdaq Composite Index News , chart, profile, more Last: 2,090.24-38.62-1.81% 5:18pm 07/12/2006
$COMPQ2,090.24, -38.62, -1.8% ) fell 38.62 points, or 1.8% to 2,090.24, its lowest close since June 14. Chart of $INDU The Dow Jones Industrial Average ($INDU : Dow Jones Industrial Average News , chart, profile, more Last: 11,013.18-121.59-1.09% 4:30pm 07/12/2006
$INDU11,013.18, -121.59, -1.1% ) fell 121.59 points, or 1.1% to 11,013.18, while the S&P 500 Index ($SPX : S&P 500 Index News , chart, profile, more Last: 1,258.60-13.92-1.09% 5:00pm 07/12/2006
$SPX1,258.60, -13.92, -1.1% ) shed 13.92 points, or 1.1% to end at 1,258.60. Stock losses mounted in afternoon trading after the U.S. blamed Syria and Iran for the kidnapping of two Israeli soldiers along the Israel-Lebanon border, and a report that Iran is set to be referred to the United Nations Security Council over its nuclear enrichment program. "The geopolitical situation has worsened quite a bit in the last of couple of days with what has taken place in India and what has been going on between Israel and Palestine and now Lebanon," said Michael Malone, trading analyst at Cowen & Co. But "more than anything, the second-quarter earnings season has got off to a rough start," he said. "We've had some fairly high-profile pre-announcements with the likes of EMC, 3M and Lucent and some disappointing results from both Genentech and Alcoa." Technology shares have been leading the sell-off on the stock market as investors worry an economic slowdown brought about the Federal Reserve's string of seventeen interest-rate increases will hurt corporate spending especially as regards investment in new computers and other information technology products. Higher rates make it more expensive for companies to borrow money they may need for capital investment projects. Intel (INTC : Intel Corporation News , chart, profile, more Last: 17.88-0.78-4.18% 5:00pm 07/12/2006 Delayed quote data Add to portfolio Analyst Create alert Insider Discuss Financials Sponsored by: INTC17.88, -0.78, -4.2% ) , International Business Machines (IBM : International Business Machines News , chart, profile, more Last: 75.48-0.99-1.29% 4:57pm 07/12/2006 Delayed quote data Add to portfolio Analyst Create alert Insider Discuss Financials Sponsored by: IBM75.48, -0.99, -1.3% ) and Hewlett-Packard (HPQ : Hewlett-Packard Co. News , chart, profile, more Last: 31.67-0.87-2.67% 4:46pm 07/12/2006 Delayed quote data Add to portfolio Analyst Create alert Insider Discuss Financials Sponsored by: HPQ31.67, -0.87, -2.7% ) were three of the biggest decliners on the Dow industrials in Wednesday's session. On the broader market for equities, decliners outpaced advancers by more than 2 to 1 on the New York Stock Exchange, and by more than 3 to 1 on the Nasdaq. By sector, semiconductors ($SOX : phlx semiconductor index sox News , chart, profile, more Last: 0.000.000.00% 12:00am 12/30/1899 Delayed quote data Add to portfolio Analyst Create alert Insider Discuss Financials Sponsored by: $SOX0.00, 0.00, 0.0% ) gave up their prior-session gains. Networkers ($NWX : amex networking index-nwx equal-$ weight News , chart, profile, more Last: 212.73-5.31-2.44% 4:33pm 07/12/2006 Delayed quote data Add to portfolio Analyst Create alert Insider Discuss Financials Sponsored by: $NWX212.73, -5.31, -2.4% ) , Internet stocks ($GIN : CBOE Gsti Internet Index News , chart, profile, more Last: 165.17-4.35-2.57% 4:49pm 07/12/2006 Delayed quote data Add to portfolio Analyst Create alert Insider Discuss Financials Sponsored by: $GIN165.17, -4.35, -2.6% ) , retailers ($RLX : s&p retail index-rlx News , chart, profile, more Last: 431.58-11.14-2.52% 4:29pm 07/12/2006 Delayed quote data Add to portfolio Analyst Create alert Insider Discuss Financials Sponsored by: $RLX431.58, -11.14, -2.5% ) and brokerages ($XBD : amex securities broker/dealer xbd News , chart, profile, more Last: 205.20-4.71-2.24% 4:33pm 07/12/2006 Delayed quote data Add to portfolio Analyst Create alert Insider Discuss Financials Sponsored by: $XBD205.20, -4.71, -2.2% ) all fell sharply. The White House statement boosted safe haven interest in gold, allowing gold stocks ($GOX : CBOE Gold Index News , chart, profile, more Last: 149.73-1.47-0.97% 4:49pm 07/12/2006 Delayed quote data Add to portfolio Analyst Create alert Insider Discuss Financials Sponsored by: $GOX149.73, -1.47, -1.0% ) to rally. Oil services stocks ($OSX : phlx euro style oil svc index osx News , chart, profile, more Last: 210.95+0.39+0.19% 5:02pm 07/12/2006 Delayed quote data Add to portfolio Analyst Create alert Insider Discuss Financials Sponsored by: $OSX210.95, +0.39, +0.2% ) put in a modest gain. Volume was 1.47 billion on the Big Board, and over 1.81 billion shares on the Nasdaq. Mideast tensions worsen Investors reacted negatively to the latest spike in political tensions in the Middle East. Israel launched an assault in southern Lebanon with planes and tanks after two Israeli soldiers were captured along by the Lebanese Hezbollah group. The latest kidnappings come amid an Israeli offensive in the Gaza Strip to secure the release of another of its soldiers captured last month by Hamas. "We also hold Syria and Iran, which directly support Hezbollah, responsible for this attack and the ensuing violence," said National Security Council spokesman Frederick Jones, traveling with President Bush in Germany. U.N. Secretary General Kofi Annan called for the immediate release of the soldiers and cautioned against an escalation in violence similar to what has occurred in Gaza since the kidnapping of Israeli solider Gilad Shalit there last month. About 71 Palestinians have been killed in the Israeli response to the kidnapping. Israeli Prime Minister Ehud Olmert called the latest abductions an "act of war" and promised a "very painful" response. Syrian officials said they were not responsible for the kidnappings by the "resistance" in Palestine and Lebanon. In other events Wednesday, world powers agreed to send Iran back to the Security Council which will decide on possible punishment over Tehran's disputed nuclear program, according to the Associated Press. The United States and other permanent members of the Security Council said Iran has had long enough to say whether it is open to bargaining that would give Tehran economic and energy incentives in exchange for giving up suspicious activities, the AP reported. "The Iranians have given no indication at all that they are ready to engage seriously on the substance of our proposals," French Foreign Minister Philippe Douste-Blazy said on behalf the United States, France, Britain, Russia and China, the five permanent Security Council members, plus Germany and the European Union. See full story. On the data front, the U.S. trade deficit widened by 0.8% in May to $63.8 billion as both imports and exports set monthly records. Economists had expected the deficit to hit $64.7 billion.
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