NEW YORK (AFX) 10th Oct 2005—U.S. stocks were weaker Monday, as General Motors slid 6% and other auto stocks sold off in the wake of Delphi’s bankruptcy filing and as warnings from Northrop Grumman, Xilinx and others compounded the negative sentiment.
The Dow Jones Industrials declined 8.75 points to 10,283.56, the S&P 500 dropped 4.76 points to 1,191.14, and the Nasdaq composite shed 4.70 points to 2,085.65.
In the broad market, declines outnumbered advances by a 20 to 11 margin on the NYSE and by a 16 to 12 score on the Nasdaq market.
Volume was light due to the Columbus Day holiday, with more than 907 million shares traded on the NYSE as over 889 million shares moved on the Nasdaq.
Stocks opened higher but later weakened, although both gains and losses were slight and trade was quiet.
Gordon Fowler Jr. said, “The markets seem destined to muddle through the next few months trying to figure out whether the economy is going through temporary or longer lasting troubles.”
“There’s not a lot of action today,” said Michael Malone, a trading analyst at SG Cowen. “It’s going to be a quiet session. The market sold off considerably last week and Alcoa reports tonight, kicking off earnings season. People seem to be waiting to see what the earnings and guidance look like.”
Investors are unusually eager for the third-quarter reports because they have been uncertain about how much recent hurricanes and soaring energy prices have cut into corporate profit.
“The market is currently facing a lot of headwinds,” in the form of inflation, higher rates and the possibility of a weak third-quarter earnings season, said Michael Sheldon, chief market strategist at Spencer Clark.
“It needs a catalyst to move higher,” Sheldon said. “We think the most likely one would be a sustained decline in energy prices. But barring that, we expect to see consolidation with a downward bias.”
Energy futures contracts continued their recent downward trend, lending a measure of support to equities. The contracts have been backing off records on the perception that consumers will cut back on their energy usage and blunt demand.
Crude futures last were down 84 cents at $61 a barrel as natural gas futures slid 36.6 cents to $12.86 per million British thermal units.
Gold for December delivery last was up 30 cents at $478 an ounce, after touching an 18-year high past $480.
December copper futures earlier hit a record price of $1.821 a pound, after rising 1.25 cents on the session. See
The dollar was higher, trading up 0.5% at 114.25 yen as the euro fell 0.6% to $1.2057. The buck rose gains the euro as traders said the new German leadership resolution may not offer a sure path for passing the economic reforms necessary to recharge the euro-zone’s economy.
The bond market is closed for Columbus Day and no economic reports were scheduled for Monday.
Stocks in motion
The Dow Jones U.S. Automobiles and Parts Index was down 6.6% at 185.54.
Delphi shares fell 58% to 47 cents after the auto parts maker filed under the bankruptcy laws on Saturday. The filing, linked to high wage and benefit expenses, was the largest in the history of the domestic auto industry.
Shares of Delphi’s former parent, General Motors , a Dow component, were 6% lower at $26.62, after S&P downgraded the company’s long- and short-term debt.
GM also was downgraded to sell at Banc of America, which said that the possibility that the company will file for bankruptcy has risen to 30% from 10% in the wake of the Delphi filing.
Among other auto makers, Ford was down 3% at $8.96.
Dana Corp. was 31% lower at $6.38. The auto systems company Monday said it will have to restate earnings for 2004 and part of 2005 and delay its third-quarter report, due to accounting-controls issues.
Visteon , which also makes auto parts, was down 3.6% at $8.69.
Northrop Grumman fell 19cents to $53.86. The defense contractor said hurricane damage to its shipbuilding operations in Louisiana and Mississippi will cost $1 billion and knock earnings lower.
Shares of Flir Systems dropped 13% to $24.19 after the maker of thermal imaging systems gave a third-quarter profit and revenue outlook that did not meet Wall Street expectations.
Xilinx Inc. skidded 12.6% to $24.36. The chip maker revised down fiscal 2006 September quarter sales estimates to a sequential decline of 1% to 2%, compared with a prior estimate of flat to 4% growth.
IBM last was up 1.9% at $82.07 after Citigroup upgraded the Dow component to buy from hold, saying the company is gaining market share in the mid-range and high-end server market. See .
Dell rose 2.3% to $32.79, helped by an upgrade by Needham.
Wal-Mart gained 1.9% to $44.89 after the world’s biggest retailer reaffirmed its October sales growth forecast. In addition, the business weekly Barron’s suggested the stock was trading at a bargain price.
Jefferson-Pilot Corp. was up 6.2% at $53.97 after Lincoln National Corp. bid $7.5 billion for it, in one of the biggest acquisitions in the financial sector in recent months.
This story was supplied by MarketWatch. For further information see www.marketwatch.com.