The Dow Jones industrial average fell 51.2 points, or 0.6%, to 8,531.57. The broader Standard & Poor's 500-stock index lost 3.53 points, or 0.38%, to 926.55. Meanwhile, the tech-laden Nasdaq composite index inched up 1.16 points, or 0.08%, to 1,504.04.
The main event of the week is Tuesday's Federal Reserve Open Market Committee meeting. Despite deterioration on the labor front, most economists expect the Fed to keep interest rates steady. "While very few market participants are looking for a rate cut, there is a great deal of speculation about how the Fed will describe the economy in the statement that is released with the FOMC policy announcement," says economic research outfit MMS International.
The economic news Monday was evenly split, notes MMS, as the ISM Services Index rose more than expected to 50.7 in April after dipping below the 50 boom-bust line in March to 47.9, while Challenger Grey reported planned job cuts rose 71% to 146,399 in April as local and state governments cut costs.
The tech sector got a boost Monday from news that Texas Instruments (TXN
) reaffirmed its earnings per share outlook of about 8 cents for the second quarter ending June 30. In a filing with the Securities and Exchange Commission, the chipmaker also said it sees revenue growth of 7% from the first quarter.
Investors will get more clues on the health of the tech sector when Cisco Systems (CSCO
) reports fiscal third-quarter results after the market close Tuesday. Analysts expect the networking gear maker to earn 14 cents per share, vs. 11 cents a year ago.
Other well-known companies slated to report quarterly earnings Tuesday include Electronic Arts (ERTS
), Watson Pharmaceuticals (WPI
), Gillette (G
), and CVS (CVS
Among other stocks on the move Monday, USA Interactive (USAI
) agreed to acquire LendingTree (TREE
) in a stock swap valued at $734 million. The deal adds lending services to USA Interactive's e-commerce offerings, which include Expedia, Ticketmaster, and HSN.
In earnings news, Oxford Health Plans (OHP
) reported first-quarter earnings per share of 86 cents (includes a 32 cents one-time charge), vs. 78 cents a year ago, on a 15% revenue rise. Its EPS beat the analysts' consensus estimate, and the health insurer raised its outlook for 2003.
J.C. Penney (JCP
) shares rose after the retailer says it sees 2% to 3% higher May same-store sales.
In other corporate news, the Justice Dept. is reportedly investigating Boeing (BA
) for alleged use of documents on rival Lockheed Martin's (LMT
) rocket project in 1996, according to the Wall Street Journal.
AOL Time Warner's (AOL
) largest shareholder will oppose the re-election of retiring chairman Steve Case and two other directors to its board at its annual meeting on May 16, according to the Wall Street Journal.
Over the weekend, Warren Buffett gave his annual State of Berkshire Hathaway (BRKA
) report to shareholders in Omaha. Buffett said Berkshire's first-quarter operating earnings would be about $1.7 billion. In his speech, Buffett stressed the importance for shareholders to dump bad and unethical CEO's with large shareholders taking lead responsibility. On the dividend tax cut, Buffett said it helps mostly the rich and is unfair. Lastly, the legendary 72-year old investor revealed that he has named four potential successors to lead Berkshire after he finishes his tenure.
Treasuries finished higher in price Monday as stocks lost steam. Hopes built over the session Monday that the FOMC might at least introduce a weakened assessment of economic risks at tomorrow's meeting, though the vast majority of market participants do not expect a rate cut, says MMS International. The market seemed to give a slight priority to the Challenger Layoff report, which dovetailed with recent claims and payrolls weakness, notes MMS.
On Tuesday, the Treasury will auction 3-year notes to kick off the $58 billion May refunding.
European markets were higher Monday. In Germany, the DAX index was up 27.04 points, or 0.91%, to 3,013.04. The gains were seen as a carryover of Friday's positive move, as traders bet on some sort of recovery later this year even though economists are skeptical. In France, the CAC 40 index gained 33.1 points, or 1.12%, to 2,996.22. London's stock market was closed for a banking holiday.
In Asia, Japan's stock market was closed Monday for a holiday. Hong Kong's benchmark Hang Seng index rose 108.31 points, or 1.23%, to 8,916.49.