The Dow Jones industrial average ended down 79.57 points, or 0.78%, to 10,204.89. The broader Standard & Poor's 500 index lost 6.35 points, or 0.57%, to 1,122.20. The Nasdaq composite index ended down 2.02 points, or 0.11% at 1,908.07.
Traders have already shifted attention to Tuesday's meeting of the Federal Reserve's interest-rate setting committee. The market remains set for a quarter point hike. Chief market analyst for Standard & Poor's, Paul Cherney, notes that "a sell-off on the rate hike on Tuesday is doubtful, but strongly reassuring words in phrases unused before (about the potential for future growth in the economy) would be bullish fodder."
During Monday's session, the Nasdaq was helped somewhat by Intel (INTC
), which finished 2.3% higher on news that the company's investing organization, Intel Capital, has made more investments in companies developing digital home technology.
The market's inability to keep its head above water on Monday shouldn't be cause for concern, says Larry Wachtel, market analyst at Wachovia Securities, noting the overall weakness in the Dow, and the 1,300 stocks trading higher vs. 1,800 that are lower. "Since August, we've been kind of on a roll," he says. When the market reaches an overbought condition, notes Wachtel, "the rubber band snaps back."
Topping corporate news, shares of Colgate-Palmolive (CL
), the consumer products outfit that makes Colgate toothpaste and Irish Spring soap, ended 11% lower. The company put Wall Street on notice that second half profits will miss expectations because of higher marketing costs. The company now expects fourth-quarter earnings as high as 59 cents per share, vs. previous guidance of 71 cents. S&P reiterated its hold rating.
Meantime, Unilever (UL
), the name behind brands such as Dove and Lipton Iced Tea, was off by 5.2% on news that its third-quarter EPS will be lower than it was in 2003.
Those warnings spawned selling in other consumer staples issues, including Procter & Gamble (PG
), Kimberley-Clark (KMB
), and Clorox (CLX
Also raising concern Monday was news that oil prices rose above $46 per barrel, with Nymex October crude at $46.20. According to Informa Global Markets, Russian oil outfit Yukos has also re-entered the picture after announcing that it will suspend some oil exports to China, as well as oil supplies to its Lithuanian refinery until the end of the year. On the other hand, Iraqi loading from the southern Basra terminal is now up to the full two million-barrel capacity. Higher oil prices can crimp consumer spending and corporate profits.
In pharma news, OSI Pharmaceuticals (OSIP
) and Genentech (DNA
) were higher on positive clinical results from their pancreatic cancer drug, developed with Roche. The drug met its goal of improving survival. First Albany reiterated its buy rating on OSI Pharmaceuticals, and shares gained 9%, while Genentech rose 3.7%.
), which designs chips for telecommunications, warned that it was cutting its revenue outlook for the third quarter. Shares moved 4% higher.
) gained on news that it has repurchased about $1.3 billion shares, while setting an additional $3 billion stock buyback. S&P reiterated its hold rating.
Investors received good earnings news from footwear and apparel company Nike (NKE
), which reported a rise in quarterly profit to $1.21 per share (diluted), vs. 98 cents one year earlier, on 18% higher revenue.
The rest of the week's earnings calendar is dominated by big-name brokerage reports. Goldman Sachs (GS
) and Lehman Brothers (LEH
) report on Tuesday, with Morgan Stanley (MWD
) and Bear Stearns (BSC
) set for Wednesday. Other companies reporting earnings this week include General Mills (GIS
) and FedEx (FDX
Economic data pales next to the FOMC meeting this week, but traders will get a new dose of U.S. housing data on Tuesday. "Over a slightly longer time-frame... the housing data are a bigger issue," says economic research firm, Informa Global Markets. "If one of the strongest sectors in the economy begins to cool off, it can't be ignored."
U.S. Treasuries gained in price on Monday, finishing at session highs on short covering. The yield on the 10-year note fell to 4.08%. The market has discounted a 25 basis point Fed tightening tomorrow, "but [remains] anxious about post-meeting statement on intentions," notes S&P's MarketScope.
European stock markets finished lower on Monday, but off their session lows. London's Financial Times-Stock Exchange 100 index shed 11.5 points, or 0.25%, to 4,579.50 following reports British mortgage lending slowed in August and that U.K. Chancellor Gordon Brown is worried about global economic growth in 2005. Britain's budget deficit narrowed more than economists had expected in August.
Germany's DAX index fell 10.39 points, or 0.26%, to 3,977.68 as oil prices rose. Consumer goods maker Henkel was lower after Unilever cut its annual profit forecast. Infineon Technologies was lower after Samsung Electronics said it expects global chip sales next year to grow at half this year's pace.
In Paris, the CAC 40 index lost 22.53 points, or 0.6%, to 3,703.69 on higher oil prices and Unilever's lower forecast. Danone was lower in reaction to Unilever's lower outlook.
In Asia, the markets finished lower on Monday. Japan's stock market was closed in observance of Respect for the Aged Day.
In Hong Kong, the Hang Seng index eased 3.6 points, or 0.03%, to 13,221.33 with China plays trending higher after former Chinese president Jiang Zemin gave up the top job in China's military on Sunday and news that Beijing is considering implementing various market reforms to boost equity markets.