The Dow Jones industrial average declined 47.48 points, or 0.54%, to 8,679.25. The broader Standard & Poor's 500-stock index was down 2.81 points, or 0.30%, to 942.30. The tech-heavy Nasdaq composite index closed lower by 1.72 points, to 1,539.68.
Geopolitical events returned to the market's radar screen Tuesday, with wire services reporting that car bombs targeting housing complexes of foreign workers in the Saudi Arabian city of Riyadh killed 29 people. Crude oil prices climbed more than $1 on the news.
Economic news also weighed on stocks. The March trade deficit rose to $43.46 billion, the second highest on record and worse than expected.
Though it was a sluggish day, analysts are relatively pleased with overall market performance. "Investors are weathering bad news well, compared to March, when one piece of bad news sent us spinning," says Bryan Piskorowski, a market analyst with Prudential Securities. "But this is a leap of faith in the current environment, and should numbers come in weaker than expected (later this week), we're set up to see a pullback."
After the close of trading, Applied Materials (AMAT
) announced a quarterly net loss of $62 million, or 4 cents per share. Applied Materials says that it has $971 million in new orders, and had net sales of $1.11 billion in the quarter. The stock closed down 2.2% for the day, but lost nearly 1% in after-hours trading.
Technology stocks came under some pressure in Tuesday's session after Merrill Lynch downgraded some semiconductor names. Cisco Systems (CSCO
), which enjoyed gains Monday, closed 1.3% lower than at the start of the day. Nvidia Corp. (NVDA
) declined 1.83% to close at 20.39, while Intel (INTC
) shares finished 0.8% down, at 19.83.
Bucking the downtrend was Skyworks Solutions Inc. (SWKS
), which moved higher after CIBC World noted that the wireless semiconductor company should gain market share in all product lines, reiterating that the sector will outperform. The shares climbed nearly 16% to close at 6.72.
" ) jumped nearly 12% Tuesday after analysts said it was the best positioned supplier of personal video recorder (PVR) services for cable-system operators. The company closed at $18.
Pride International (PDE
" ), a contract drilling company, closed 4.4% higher after announcing that a unit of Mexican oil outfit Pemex has awarded the company six new contracts, increasing its contract backlog by about $220 million.
Investors looked for clues regarding the health of consumer spending. Wal-Mart (WMT
" ) kicked off the day's retail updates by reporting that its earnings swelled 14%, thanks to cost-cutting. Sales rose 9.7%, as the company moved more groceries and select clothing lines. Wal-Mart closed down 1.5%.
Department-store and drugstore operator J.C. Penney (JCP
) also reported earnings this morning. First quarter profit dropped 29% on a 3% decline in total sales, but the company maintained its second-quarter earnings guidance. Penney traded higher, closing up 5.4% at 18.85.
Youth-oriented apparel merchant Abercrombie & Fitch (ANF
), reported a first-quarter earnings increase of 13% to 26 cents per share. Net sales increased 11% to $346.7 million, though comparable store sales fell 6% in the quarter. The stock closed lower by 3.7%.
Weight Watchers International (WTW
) shed 7.7% after the weight-loss services outfit posted lower-than-expected earnings per share of 37 cents on an 18% revenue rise. The stock closed at $42.
Other stocks in the news Tuesday included News Corp. (NWS
), the major broadcasting, motion picture and publishing concern. The company posted earnings per American Depositary Share of 23 cents on 14% higher revenues. Its shares closed up nearly 3%.
Shares of QLT Inc. (QLTI
) fell 9.5%, to close at 11.68, after the developer of proprietary pharmaceutical products said it has discontinued its Phase III tariquidar trials in non-small cell lung cancer.
Avanex Corp. (AVNX
), a small-cap fiber optics component maker, announced late Monday that it will acquire Alcatel's (ALA
) and Corning's (GLW
) optical components business in combined transactions worth $63.5 million. Avanex gained about 143% to close at 2.89. Corning closed 2.8% higher, at 6.15, and Alctel closed down 3.2% to 8.25.
On Wednesday, traders will get reports on retail sales for the month of April, as well as the producer price index. Economic researcher MMS International estimates that April retail sales will be unchanged, while the ex-auto component declines 0.1%. "Overall, the consumer has remained resilient through much adversity," says economic research outfit MMS International.
The weekly jobless claims figure will be updated on Thursday, with some analysts expecting the current market rally to stall if labor market indicators don't improve. Industrial production and capacity utilization is also out on Thursday, followed by the April consumer price index, housing starts, and University of Michigan consumer sentiment on Friday.
With a tight grip on recent gains, Treasuries Tuesday held their own and the yield curve continued to flatten.
There wasn't much reaction in the markets to the release of a report showing a slightly wider U.S. trade deficit. The trade gap for April came in at $43.5 billion, up from $40.4 billion the prior month. This is the fifth consecutive month that the deficit has exceeded $40 billion. "By 2004 both exports and imports should be growing at roughly a 10% clip, if the global expansion continues," says MMS International.
The 30-year bond continued its recent winning streak, and prices appeared ready to challenge 44-year highs reached in March.
The weak dollar trend is also likely to continue, though as the treasuries climbed over the session the dollar cut some of its recent losses.
European markets ended mixed Tuesday. Germany's DAX index was down 3.6 points, a loss of 0.12% at 2,933.66. In France, the CAC 40 index recovered from earlier losses, closing up 0.03% at 2,963.63.
London's FTSE 100 index flirted with the 4,000 mark all day Tuesday, and closed just below it at 3,999.90, up 0.31%.
Positive news came from Swiss bank UBS (UBS
), the world's sixth-largest bank, which posted first-quarter net profit fell 11%, which was slightly better than what analysts had expected. The company says its profit decline was partly due to the weakening dollar, but adds that the worst of the bear market may be over.
April labor data is due tomorrow in the U.K., and is expected to show unemployment claims rising for the third consecutive month, marking the longest period of increase since late 2001, says MMS International, adding, "while this would keep the unemployment rate stable at 3.1%, surveys and anecdotal evidence continue to point to weak recruitment intentions."
Asian markets had a somber tone compared to their Monday gains. Japan's Nikkei 225 average closed at 8,190.26, or 0.38% lower. The Nikkei had closed at its highest point in a month on Monday.
In Hong Kong, the Hang Seng index finished down 0.40% to 9119.04.