The Dow Jones Industrial average eased 19.34 points, or 0.19%, to 10,022.82. The broader Standard & Poor's 500 index dropped 6.1 points, or 0.57%, to 1,068.04. The tech-heavy Nasdaq Composite lost 30.74 points, or 1.58%, to 1,918.26.
By the end of the session, traders were already turning their focus to Tuesday when AVANIR Pharmaceuticals (AVN
) and Maxim Pharmaceuticals (MAXM
) are due to report results.
After the market close Monday, Oracle (ORCL
) reported quarterly earnings that beat analysts' forecast on strong software-licensing revenue.
The software giant reported net income for its fiscal second quarter of $617 million, or 12 cents a share, vs. $535 million, or 10 cents a share, a year earlier. Revenue climbed 8% to $2.5 billion from $2.3 billion a year earlier.
Tuesday's economics calendar will be heavy, with a reading on inflation at the consumer level expected to garner the most attention. The consumer price index, or CPI, is expected to have ticked up 0.1% last month after being unchanged in October.
Also of importance will be new home construction figures for November. Housing starts are expected to cool to a 1.92 million annualized rate from 1.96 million in the previous month. Data on current account deficit and industrial production will also be released.
U.S. officials are hoping that the capture of the Iraqi strongman capture will be blow to the insurgency that has claimed the lives of U.S. and allied troops as well as members of the fledgling government in Iraq. But another bombing in Iraq that killed several Iraqis on Monday weakened that argument.
Among the stocks weighing on the market was AT&T (T
), which Bear Stearns downgraded to peer perform from outperform, and cut its 2004 earnings per share estimate. CS First Boston downgraded the shares of the long-distance carrier to neutral from outperform. Also, Morgan Stanley lowered its earnings estimate for AT&T's fourth quarter to 34 cents earnings per share. Last week, AT&T warned that it now sees around a 6% decline in business-services revenue in fiscal 2003 as prices continue to drop.
And Wal-Mart (WMT
), the world's largest retailer, said U.S. same-store sales for the five-week holiday period ending Jan. 2 were coming in near the low end its target range for 3% to 5% growth.
Soft drink giant Coca-Cola (KO
) said it is well-positioned to keep growing profits in 2004, but is looking improve results from initiatives in some key markets around the world.
Online brokerage Ameritrade Holding (AMTD
) raised its earnings forecast for the first quarter of fiscal 2004 and the full year.
And in merger news, Germany's Henkel said it plans to buy U.S. soap and detergent maker Dial (DL
) for $2.9 billion, or $28.75 a share, in cash.
Treasuries closed lower. In economic news, the Empire State manufacturing survey fell to 37.4 in December vs. 40.1, which was a bit weaker than expected.
In other economics news, the U.S. home builders index for December stands unchanged at 70, down just 1 point from the recent high of 71 in September, MMS International reports. The single-family sales index edged down to 77 in December from 78 in November, while the prospective buyers traffic index rose to 51 from 47. The single-family sales outlook index (6-months out) dipped to 76, still healthy, but among the lower readings in recent months. In all, the components are still quite healthy, just not climbing anymore, MMS says. There may be some upward revisions to housing starts expectations based on these results, but only small ones.
In Central Bank news, Federal Reserve Bank of Richmond President Alfred Broaddus says that a Federal funds rate somewhat above 1% could also be considered accommodative, according to MMS. Though it has been implicit in much recent Fed talk about the "output gap" - he's watching unit labor costs. Disinflationary pressures must be related to falling unit labor costs, at least in some measure. In regard to the dollar, he notes that a narrower trade gap could help the U.S. currency, noting that faster growth abroad could help narrow the gap. That said, he does not expect dollar selling "will get out of hand," says MMS.
European stock markets ended slightly higher in reaction to news of Saddam Hussein's capture. London's Financial Times-Stock Exchange 100 index gained 0.4 point, or 0.01%, to 4,348, as the market weakened from the best levels of the session amid reports that Britain's inflation could rise.
In Paris, the CAC 40 added 19.82 points, or 0.57%, to 3,490.42. There was little reaction to a report that the European Union failed to agree on constitution at its weekend meeting. But some worried that the recent strength in the euro might restrain EU recovery.
Germany's DAX index advanced 15.34 points, or 0.4%, to 3,875.47. But the market was restrained by news that German leader Gerhard Schroeder and opposition agreed to a package of tax cuts that are about half of what the Chancellor proposed, which some observers will make it more difficult for German economy to recover.
Asian markets finished higher Friday. In Japan, the Nikkei 225 index rose 321.11 points, or 3.61%, to 10,490.77 since the capture of Saddam Hussein was widely expected to cheer Wall Street by lifting certain geopolitical risk. In Hong Kong, the Hang Seng index lost 74.25 points, or 0.59%, to 12,520.17.