Russell 2000, Dow slide down
The Russell 2000 (NYSE: IWM) and the Dow fell today following news of weakness in the tech sector and unimpressive economic reports. The small-cap index fell 5.82 points, or 0.70%, to 826.15. The Dow Jones Industrial Average (INDU) lost 79.26 points, or 0.56%, to 13,968.05.
Small-cap futures were pointing slightly higher before the opening but the Russell 2000 stumbled out of the gate along with the other major U.S. indices and never ventured into positive territory.
Contributing to the bearish sentiment was Boise, Idaho-based semiconductor maker Micron Technology Inc. (NYSE: MU), which said it is projecting a third quarter net loss of $0.27 per share, compared with a previous guidance calling for a loss of $0.17 per share. Wall Street was expecting the company to post a loss of $0.22 per share.
The tech sector later received another hit when financial services giant Morgan Stanley (NYSE: MS) downgraded chipmakers Intel Corp. (Nasdaq: INTC) and Advanced Micro Devices Inc. (NYSE: AMD), saying that the two companies may be drawn into a price war.
In economic news, the Mortgage Bankers Association reported that its weekly index of mortgage loan application volume fell 2.7% for the seven days ended Sept. 28. However, the four week moving average, a more stable measure, rose 0.5%.
In a sign that the credit squeeze has eased somewhat, the Washington, D.C.-based trade organization also announced that the average contract interest rate for 30-year fixed-rate mortgages decreased to 6.32% from 6.38%.
In other economic news, nonfarm private employment grew 58,000 from August to September of 2007, according to Automatic Data Processing, Inc. (NYSE: ADP), a provider of business outsourcing solutions. That’s in line with economists’ projections and an indication that the U.S. labor market remains tight.
Investors appear to be holding their breath ahead of Friday’s eagerly awaited release of the government’s monthly report on nonfarm payrolls. Stocks fell sharply on Sept. 7, when the data for August showed an unexpected drop.
The numbers for September will be analyzed for clues on the state of the labor market and the health of the overall economy.
A report released today by the Institute for Supply Management showed that non-manufacturing business activity is expanding, but at a slower-than-expected pace. ISM’s index of business activity in the non-manufacturing sector showed a reading of 54.8 in September, below the projected level of 55. The reading in August was 55.8.
