Profit takers drive Wall Street lower
INVESTORS took profits after a recent rise in US stocks today, but a late-hour rally in Bank of America shares helped the Dow squeeze out its eighth straight day of gains. Market participants remain confident that solid corporate earnings will inspire further advances, but a recent string of lightly traded sessions raises worries that buying interest at current levels has dried up.
Dow component Cisco Systems reported its second-quarter results, and though the network equipment maker’s profit and sales beat expectations, its margins disappointed and the stock sank 9.4 per cent to $19.97 (£12.40) in extended trading.
Energy and materials stocks weighed on indexes, pressured by weakness in emerging markets, a source of heavy demand for raw goods.
Chevron was the weakest stock on the Dow, falling 1.5 per cent to $96.24, followed by Alcoa, off 1.4 per cent to $17.16. The Morgan Stanley commodity-related equity index fell one per cent.
“We’ve had such a great run that we’re seeing some profit-taking even though there’s really no information out there that’s taking us down,” said Tom Wirth, senior investment officer for Chemung Canal Trust, which manages $1.5bn in Elmira, New York.
Dow components Walt Disney and Coca-Cola advanced after reporting strong quarterly sales. Disney was the strongest performer on the index, surging 5.3 per cent to $43.36 and Coke gained 0.4 per cent to $63.15.
“Earnings are very strong and they’re what’s keeping the market higher,” Wirth said. “Without Disney and Coke today, the Dow’s losses would be a lot greater.”
Gains in Bank of America in the final hour of trading were enough to drag the Dow into positive territory.
Shares rose after WikiLeaks founder Julian Assange said privately he doesn’t know if his cache of internal BofA data contains any big news or scandal, according to three people familiar with Assange’s private discussions about the material.
BofA rose 0.2 per cent to $14.64, erasing earlier losses.
Trading volume continued to be weak, with only a total of 7.36 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year’s daily average of 8.47 billion.
The Dow Jones industrial average was up 6.74 points, or 0.06 per cent, at 12,239.89. The Standard & Poor’s 500 Index was down 3.69 points, or 0.28 per cent, at 1,320.88.
The Nasdaq Composite Index was down 7.98 points, or 0.29 per cent, at 2,789.07.