Dow, Nasdaq fall after Fed minutes, tech a weak spot

NEW YORK Wed Jul 11, 2012 6:18pm EDT

Traders work on the floor of the New York Stock Exchange, July 10, 2012. REUTERS/Brendan McDermid

Traders work on the floor of the New York Stock Exchange, July 10, 2012.

Credit: Reuters/Brendan McDermid

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NEW YORK (Reuters) - The Dow and the Nasdaq lost ground on Wednesday as minutes from the Federal Reserve's June meeting showed policymakers are open to the idea of more economic stimulus, but that conditions might need to worsen first.

The S&P 500 ended unchanged, breaking a four-day losing streak, after paring losses into the close. Technology and industrials led the S&P's losers, as the market was hit by a number of high-profile earnings warnings in recent days.

Investors were hoping the Fed's June minutes would suggest the central bank was getting closer to another round of stimulus. The lack of clues prompted selling in all three major indexes, though stocks pared losses just ahead of the close.

"A few Fed members noted additional policy action could be warranted if the economy were to lose momentum; however, it doesn't seem like anything concrete is imminent," said Michael Sheldon, chief market strategist of RDM Financial, in Westport, Connecticut.

"That, along with the FOMC's citing that risks have increased and volatility is higher, are probably the culprits for the market's afternoon swoon."

The Nasdaq was the worst performer of the three major indexes. Network gear maker Adtran Inc (ADTN.O) warned about third-quarter revenue, driving its stock down 15.4 percent to $23.01 and hitting shares of its rivals. Juniper Networks (JNPR.N) fell 1.1 percent to $14.68, and Ciena CIEN.O lost 7.9 percent to $14.15.

The warning followed weaker forecasts earlier this week from chipmakers, including Advanced Micro Devices (AMD.N). Its stock slid 2 percent to $4.89 on Wednesday.

Some analysts expect earnings disappointments from major technology companies this earnings season. They say estimates for tech names are likely to go down.

The Dow Jones industrial average .DJI shed 48.59 points, or 0.38 percent, to end at 12,604.53. The Standard & Poor's 500 Index .SPX dipped just 0.02 of a point to finish at 1,341.45. The Nasdaq Composite Index .IXIC slipped 14.35 points, or 0.49 percent, to close at 2,887.98.

It was a fifth day of losses for the Dow.

Helping to support the S&P 500 were financials, which gained after four days of losses. The financial index .GSPF was up 0.8 percent. Some banks, including JPMorgan Chase & Co (JPM.N), up 1 percent at $34.59, are due to report results on Friday.

Other earnings warnings included Hhgregg Inc (HGG.N), an appliance and consumer electronics retailer, which forecast a wider-than-expected loss for the first quarter and cut its full-year outlook. Its stock sank 36.4 percent to $7.34. Rival Best Buy Co Inc (BBY.N) slumped 8.4 percent to $19.37.

Among the day's economic data, the U.S. trade deficit narrowed by 3.8 percent in May, helped by a rise in exports, including those bound for Europe and China. But economists warned it might not last.

After the close, shares of hotel chain Marriott International MAR.N dipped 0.5 percent to $37.84 following the release of its results.

Volume was lighter than average. About 6.02 billion shares changed hands on the New York Stock Exchange, the Nasdaq and Amex, compared with the year-to-date daily average of 6.85 billion shares.

Advancers beat decliners on the NYSE by a ratio of about 16 to 14. On the Nasdaq, decliners slightly outnumbered advancers.

(Editing by Kenneth Barry and Jan Paschal)

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Comments (3)
mulholland wrote:
The plunge continues as the economy contracts.

Jul 11, 2012 2:47pm EDT  --  Report as abuse
mulholland wrote:
Euro is falling as smart money leaves PIIGS banks before the financial transaction tax and capital controls.

Jul 11, 2012 3:06pm EDT  --  Report as abuse
The US is falling into another recession. I have repeatedly advised making loans to small businesses to grow the US and EU out of their recessions, but the West thinks that “firewalls” will save them. The hoards of cash will disappear because banknotes cannot have sex with other banknotes to make new banknotes, and bank operating expenses and finance charges that banks must pay for borrowing these hoards of cash will cause the banks to fail without some plan for growth.

Small business entrepreneurs create the most new ideas for the most new jobs for the most new workers with paychecks who become customers and tax payers. Entrepreneurs create the new technologies and improvements that the economies need to thrive. New small businesses must buy from suppliers and new workers/customers shop at stores, so suppliers and stores need more workers with jobs and paychecks who become customers and tax payers to expand the circle. Profits allow businesses to repay loans, expand, and pay taxes. Workers/customers pay taxes on purchases and income, so the governments can pay workers, initiate new programs, and pay national debts.

The US and EU are unwilling to make needed changes in the financial system that would compel banks to make small business loans for the growth that is needed. Instead, the banks are allowed to invest in the financial market casino created by repeal of the Glass-Steagall Act. The US and EU may need to learn from another recession and the rise of China to be the world’s biggest economy.

Economic losses and wounded pride may cause the West to reconsider the “wisdom” of unregulated free enterprise. We have police officers to catch criminals who commit street crimes over the lure of “easy” money. Why can’t the stupid Americans and Europeans see that corporate criminals have even more options to steal massive amounts of “easy” profits and, therefore, need oversight as vigilant as that applied to prospective shoplifters? Fortunately, the punishment of economic and financial disasters cannot be avoided, and the triumph of Communist China over the US may cause the West to make corrections after sound advice has failed to bring the needed improvements.

Jul 11, 2012 5:51pm EDT  --  Report as abuse
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