Stocks finished barely lower Tuesday. Major indexes wavered, first rising off yesterday's sharp sell-off, then falling by afternoon on negative news reports. Restaurant and food stocks, impacted by a reported bovine case of mad cow disease in Canada, led the way down.
The Dow Jones industrial average finished down 2.03 points, or 0.02%, to 8,491.36. The broader Standard & Poor's 500 stock index fell 1.04 points, or 0.11%, to 919.73. The tech-heavy Nasdaq composite index was lower by 1.68 points, or 0.11%, to 1,491.09.
News that a cow in the Canadian province of Alberta was diagnosed with bovine spongiform encephalitis -- "mad cow disease" -- and that the U.S. would consequently halt meat imports from Canada hurt stocks such as restaurant chain and Dow industrials component McDonald's MCD) and meat handler Tyson Foods TSN).
Also weighing on investor sentiment: reports of a Homeland Security Dept. upgrade of the terror alert level from yellow to orange. The news came as the U.S. and Britain said they were closing their embassies and consulates in Saudi Arabia for a few days because of the threat of terror attacks.
No. 1 home improvement retailer Home Depot (HD) announced a rise in profits before the bell Tuesday. The Dow component also reaffirmed its sales and earnings targets for the current fiscal year. On Monday, competitor Lowe's (LOW) reported better profits on weaker-than-expected revenue.
Health care company Medtronic (MDT) reported solid quarterly earnings after Monday's close. But shares of it and other health care equipment stocks sank Tuesday, on news of Zimmer Holdings' (ZMH) proposed acquisition of Centerpulse Ltd.
After Tuesday's closing bell, technology giant Hewlett-Packard (HPQ) reported first quarter earnings per share of 22 cents, on $18 billion in revenue. Both figures beat Wall Street's expectations.
Shares in wireless telecommunications company Nextel (NXTL) rose after it reaffirmed its 2003 outlook.
Pharmaceutical stocks such as Merck (MRK), Pfizer (PFE), and Eli Lilly (LLY) slid Tuesday, still reeling from Monday's Supreme Court decision to allow Maine to lower prescription drug prices for the uninsured and poor.
In economic news, the April Treasury budget revealed a $51 billion surplus, down from $67.2 billion in March. "The smaller surplus during the key April tax month leaves the Treasury with a $202 billion deficit for the fiscal year to date, a sizable erosion versus the $65 billion deficit during the same period last year," notes economic research firm MMS International.
Also, the Philadelphia Fed said a quarterly survey showed economists had cut growth forecasts for the U.S. economy in 2003 to 2.2%. Last quarter's survey showed consensus GDP growth in 2003 at 2.5%.
Neither the Treasury budget nor the Philly Fed survey captivated investors, who should be focused on Fed chairman Alan Greenspan's testimony before the Joint Economic Committee of Congress on Wednesday.
All eyes should be on Greenspan, with no other economic data expected and only one S&P 500 company -- telecommnications outfit ADC (ADCT) --slated to report earnings.
Prices of U.S. Treasuries moved higher Tuesday, amid faltering stocks, the upgraded terror alert, and speculation of Fed easing. The benchmark 10-year note's yield was 3.35%.
In a slow week for economic data, traders keenly anticipate Greenspan's comments tomorrow. Thursday brings initial jobless claims data.
European markets finished trading mixed. London's FTSE index was up 30.3 points, or 0.77%, to 3,971.6. In Paris, the CAC-40 index rose 9.97 points, or 0.35%, to 2,877.26. In Frankfurt, the DAX index decreased 11.75 points, or 0.41%, to 2,838.93.
In Asia, stocks finished mixed. Japan's Nikkei 225 index rose 20.35 points, or 0.25%, to 8,059.48. Despite sharp losses on Wall Street on Monday, some Japanese exporters rose on a rebound in the U.S. dollar vs. the yen.
Meanwhile, Hong Kong's benchmark Hang Seng index decreased 36.97 points, or 0.41%, to 9,050.4.