The major markets take a dive on weaker-than-expected Michigan consumer sentiment reading.
June 13, 2003: 11:40 AM EDT
By Meghan Collins, CNN/Money Staff Writer
NEW YORK (CNN/Money) - A weaker-than-expected reading on consumer sentiment pulled U.S. stocks lower Friday morning, as investors used the news as a reason to take profits after months of strong gains.
Just after 11:30 a.m. ET, the Dow Jones industrial average (down 83.40 to 9113.15, Charts), the Nasdaq Composite (down 24.41 to 1629.21, Charts) and the S&P 500 index (down 10.58 to 987.93, Charts) all slid more than 1 percent. Despite several choppy days and Friday's losses so far, all three indexes were within range to end the week higher.
"On a relative basis, it's not as disastrous [as it seems]," said Art Hogan, chief market analyst at Jefferies & Co. "It was less than expected and the market was looking for a reason to take a breather. But it's not a mass exodus."
The report, a preliminary reading on consumer sentiment for June, showed the University of Michigan's index dropping to 87.2 this month from May's 92.1 reading. Economists surveyed by Reuters had expected the index to nudge up to 93.4 in June.
The news reversed the market, which had been able to digest the latest batch of unexciting economic reports, including a greater-than-expected decline in producer prices, before the open, as well as a profit warning from Adobe that came on the heels of Oracle's upbeat earnings report Thursday.
But after nearly three months of rallying, Wall Streeters appeared ready to take some profits and maybe even reconsider the second-half-recovery bet that has driven stocks to their highest levels in about a year.
Despite receiving mostly mediocre economic data over the past several months, investors have been buying into a rally that has lasted more than three months on hopes of better times ahead.
Headliners: Adobe, Oracle
Among individual issues moving the market, Adobe Systems (ADBE: down $3.88 to $32.10, Research, Estimates) tumbled more than 10 percent after the maker of software said its third-quarter earnings and revenue would fall below current Wall Street estimates. The warning overshadowed the company's better-than-expected second-quarter results.
Oracle (ORCL: up $0.36 to $13.69, Research, Estimates), however, climbed nearly 3 percent after it released earnings that jumped 31 percent in the latest quarter and beat Wall Street's forecasts. The company also said its current quarter revenue will be slightly higher than initially expected. The news came on the same day that PeopleSoft (PSFT: down $0.49 to $16.88, Research, Estimates) rejected Oracle's uninvited $5.1 billion takeover bid and said it would pursue its previously agreed upon merger with J.D. Edwards (JDEC: down $0.21 to $13.15, Research, Estimates).
Intel (INTC: down $0.70 to $21.44, Research, Estimates) was another early loser, slipping nearly 3 percent after Deutsche Bank Securities downgraded the stock to "hold" from "buy," arguing that a strong runup over the last few months and the lack of near-term catalysts to drive the stock higher make it less attractive at its current level.
Market breadth was negative by a margin of more than two to one. On the New York Stock Exchange, 501 million shares traded. On the Nasdaq, 841 million shares changed hands.
The weak Michigan survey helped a mixed bond market turn around, lifting the 10-year Treasury note 21/32 of a point and driving its yield down to 3.03 percent. The dollar trended lower against major currencies.
Light crude oil futures slipped 88 cents to $29.42 a barrel in New York, where gold continued to slide, losing $1.30 to $355.20.
European stock markets mostly fell in late day trading and stocks in Asia were mostly higher overnight.
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