Reports of the capture of Saddam Hussein's right-hand man lift stocks off lows in morning trading.
June 18, 2003: 11:54 AM EDT
NEW YORK (CNN/Money) - Stocks erased most of their early losses in late morning trading Wednesday after Pentagon sources said Gen. Abid Hamid Mahmud al-Tikriti, Saddam Hussein's personal secretary and number four on the list of most wanted Iraqis, had been captured.
The tech-laden Nasdaq also got a lift from Oracle's revised bid for PeopleSoft, while the Dow continued to be weighed by an Eastman Kodak warning.
Just after 11:50 a.m. ET, the Nasdaq composite (up 12.15 to 1680.59, Charts) changed directions, logging gains of about 0.8 percent. The S&P 500 index (up 1.01 to 1012.67, Charts) and the Dow Jones industrial average (down 13.31 to 9309.71, Charts) hovered around the unchanged line. The markets have spent weeks climbing to reach their highest levels in about a year in the previous session.
"We've had some pretty good gains in a lot of sectors lately that need to be adjusted," said Angel Mata, head of equity trading at Legg Mason. "The encouraging thing is we're not seeing a lot of volume, so there aren't a lot of sellers out there."
News that Kodak (EK: down $3.29 to $28.70, Research, Estimates) will miss its second-quarter earnings estimates took more than 10 percent from the stock's value and weighed on the industrial average. Kodak's decline contributed to about 50 percent of the Dow's decline in morning trading.
The Dow also felt some pressure from Coca-Cola (KO: down $0.21 to $46.99, Research, Estimates), which fell for the second day in a row after admitting that some of the results of a beverage promotion at Burger King outlets in Virginia three years ago were rigged.
But shares of PeopleSoft (PSFT: up $1.00 to $18.15, Research, Estimates) helped techs higher, bouncing more than 6 percent after Oracle (ORCL: up $0.09 to $13.44, Research, Estimates) raised its uninvited bid for the company to $19.50 a share from $16 a share and filed a lawsuit against PeopleSoft and its board. PeopleSoft, which already has a merger agreement with J.D. Edwards (JDEC: up $0.23 to $14.12, Research, Estimates), did not immediately respond. Oracle and J.D. Edwards also saw their shares jump.
News of fairly strong earnings in the financial services sector failed to attract buyers to the stocks of the companies that reported their latest results. The financial sector digested quarterly reports from some big names early Wednesday.
Morgan Stanley (MWD: down $2.32 to $47.35, Research, Estimates) fell more than 4 percent even after the firm's second-quarter earnings fell a penny from last year, but beat Wall Street's average estimate by 3 cents a share.
Bear Stearns (BSC: down $0.86 to $81.62, Research, Estimates) shed 1.5 percent even after the company said its second-quarter earnings gained 50 cents over the same period last year, coming in at $2.05 a share, and soaring past analysts' average estimate of $1.72 a share, according to tracking firm First Call.
Chip shares took a bit of a hit after an industry trade group, Semiconductor Equipment and Materials International, said orders for semiconductor manufacturing and testing gear from North American chip gear makers fell 1 percent in May from the previous month and 32 percent from a year earlier.
Traders said many investors likely will continue to hang on the sidelines until the Federal Reserve makes its decision on interest rates at its two-day meeting beginning June 24. Many tend to think the Fed will cut rates either a quarter or half of a percentage point, and say the latter amount could cause the market to surge.
But the other camp says that if the Fed keeps rates the same, investors will look at that move as a sign that the economy is strengthening, which also could aid the market.
In the meantime, market volume was moderate while breadth was negative. On the New York Stock Exchange, where 227 million shares traded, the advance/decline ratio stood at three to seven. On the Nasdaq, losers were ahead of gainers by six to four on volume of 410 million shares.
Bonds retreated as well, with the yield on the 10-year Treasury note climbing to 3.30 percent as its price fell 11/32 of a point. The dollar rose against other major currencies.
Oil fell, with Brent crude futures losing 25 cents to $26.42 a barrel in London. Gold shed $2.50 to $361.30 an ounce in New York.
European markets turned mixed after rising in the morning. Stocks in Asia closed their session mixed as well.
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