Stocks log small losses as investors regroup after last week's rally. Motorola, Freddie Mac weigh.
June 9, 2003: 10:23 AM EDT
NEW YORK (CNN/Money) - The major indexes took a hit in morning trading, led lower by warning out of Motorola and some weakness in the dollar as investors took a step back after a big rally last week.
Just after 10:15 a.m. ET, the Dow Jones industrial average (down 42.64 to 9020.15, Charts), the Nasdaq composite (down 15.58 to 1611.84, Charts), and the S&P 500 index (down 8.53 to 979.23, Charts) all logged modest losses.
Investors regrouped a bit early Monday, the first trading session after ending a second straight week of gains. The Dow rose 2.4 percent, the Nasdaq jumped 2 percent, and the S&P clocked a 2.5 percent gain last week. The major markets have all been up in five out of the past six weeks.
Weighing on stocks in the early going Monday, Motorola (MOT: down $0.48 to $8.41, Research, Estimates) fell nearly 5 percent after it warned that its earnings per share and revenue for the second quarter would miss current estimates. Its shares slid in early trading. The report also pushed other telecoms, including Qwest (Q: down $0.21 to $4.84, Research, Estimates), lower in the early going.
Shares of mortgage broker Freddie Mac (FRE: down $7.72 to $52.15, Research, Estimates) fell more than 14 percent after the firm said that it had fired its president and chief operating officer due to questions as the board reviewed the company's past financial records. Other mortgage lenders also fell on the news, with Fremont General (FMT: down $0.71 to $12.79, Research, Estimates) losing nearly 7 percent, New Century Financial (NCEN: down $2.85 to $46.31, Research, Estimates) slipping more than 6 percent, and Federal National Mortgage (FNM: down $3.34 to $71.60, Research, Estimates) dipping nearly 5 percent.
Meanwhile, the dollar was weaker versus the euro, which rallied on signs that the British government likely won't immediately vote to adopt Europe's central currency, unless the pound should fall further. The dollar also lost ground against the yen.
Investors have been watching with concern in recent months as the dollar has lost value against the euro and the yen. There have been mixed statements out of the Bush administration of late on their level of concern with a weak dollar and possible deflation.
In other corporate news, shares of information security company Veridian (VNX: up $7.16 to $34.51, Research, Estimates) rose nearly 27 percent after defense contractor General Dynamics (GD: down $0.50 to $68.11, Research, Estimates) said it would buy the company for $1.5 billion cash, including assumed debt.
The merger news comes on the heels an unsolicited bid Friday by business software maker Oracle (ORCL: down $0.09 to $13.00, Research, Estimates) to buy PeopleSoft (PSFT: up $0.11 to $17.93, Research, Estimates) for $5.1 billion, in what many saw as an attempt to derail PeopleSoft's proposed buy of J.D. Edwards (JDEC: down $0.18 to $13.02, Research, Estimates), announced earlier in the week.
PeopleSoft CEO Craig Conway said Saturday that he couldn't imagine any price, or combination of price and other conditions, that would encourage him to recommend the offer to shareholders. Meanwhile, investors waited for news from a J.D. Edwards conference call set for 10:30 a.m. ET.
Deutsche Bank raised its price target on SAP (SAP: up $0.66 to $31.38, Research, Estimates), bumping its shares more than 2 percent higher, saying that the turbulence over the Oracle-PeopleSoft debate could be helpful for the software company.
On the economic front, the government said wholesale inventories for April slipped 0.1 percent, compared with an 0.5 percent rise in March and an expected increase of 0.2 percent by a consensus of economists surveyed by Briefing.com.
Market breadth was negative. On the New York Stock Exchange, 248 million issues changed hands, while about 761 million stocks traded on the Nasdaq.
European markets fell in afternoon trading. Asian stocks finished higher overnight.
Treasury prices gained in early trading, with the 10-year note up 12/32 of a point in price to yield 3.30.
Brent oil futures retreated 24 cents to $27.04 a barrel in London. Gold rose $1.70 to $366.20 an ounce in New York.
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