August 15, 2006 > Stocks drop in light trading as investor optimism dissipates
Stocks drop in light trading as investor optimism dissipates
by Ellen Simon, AP Business Writer
NEW YORK (AP), Aug 11 _ Stocks dropped in light summer trading Friday after Apple Computer Inc. said its mishandling of employee stock options will require significant revisions to its most recent quarterly results.
Investors had broader worries, especially fears of an economic slowdown. A steep increase in retail sales did little to allay those worries.
``We're in a seasonally slow part of the year and there are a lot of unknowns on the horizon right now,'' said Mike Malone, trading analyst, Cowen & Co. ``Based on that, there really is no urgency to get overly aggressive.''
Every sector fell except for consumer discretionary stocks, which were flat after a cheery retail sales numbers reported by the Commerce Department. Retail sales rebounded in July by 1.4 percent, the biggest gain in six months. June's revised sales numbers were down 0.4 percent, much weaker than the 0.1 percent dip originally reported.
In afternoon trading, the Dow Jones industrial average fell 48.99, or 0.44 percent, to 11,075.38.
Broader stock indicators also dropped. The Standard & Poor's 500 index fell 5.83, or 0.46, to 1,265.98, and the Nasdaq composite index fell 16.64, or 0.8 percent, to 2,055.10.
The S&P 500 has been trading in a narrow range between 1,225 and 1,280 since mid-May. The bottom of the range is supported by stock valuations, but the top is held by concerns about economic growth, Malone said.
The Russell 2000 index of smaller companies was down 7.05, or 1.03 percent, to 679.22.
Any optimism investors feel is fragile. Apple's news was part of a widening scandal around the backdating of options, which has already resulted in five indictments and a series of restatement announcements at other companies, could roil Wall Street. UnitedHealth Group Inc., the nation's No. 2 insurer, on Wednesday said it would delay filing its quarterly report while it evaluates its stock options granted since 1994. More than 80 companies are undertaking voluntary reviews of their options or are being probed by government regulators.
Juniper Networks Inc. said after the close of regular trading Thursday that its board concluded the company will need to restate past financial results to record additional non-cash charges for option grant expenses.
Bonds fell, with the yield on the 10-year Treasury note at 4.96 percent, up from 4.93 percent Thursday. The U.S. dollar was mixed against other major currencies; gold prices were also mixed.
Crude oil futures fell. A barrel of light crude was quoted at $73.85, down 15 cents, in trading on the New York Mercantile Exchange.
Apple's stock fell 67 cents to $63.40. In a filing with the Securities and Exchange Commission, Apple said it expects to have to restate past results to take non-cash charges for compensation costs related to stock option granting practices.
Juniper fell 64 cents, or 5 percent, to $12.26 after its announcement about its options.
Mills Corp. fell $6.56, or 29 percent, to $16.03 after Bank of America downgraded the shopping center REIT to ``Sell'' from ``Neutral'' after the company said it will delay filing its quarterly report, and expects accounting errors to lower past earnings by as much as $210 million.
Canadian resort operator Intrawest Corp. rose $7.69, or 29 percent, to $34.20 after it agreed to be acquired by private equity firm Fortress Investment Group LLC for about $1.81 billion cash. The $35-per-share cash offer represents a 32 percent premium over Intrawest's Thursday closing price of $26.51 on the New York Stock Exchange.
Decliners led advancers by more than 2 to 1 on the New York Stock Exchange, where volume was 547.99 million, down from 678.87 million at the same time Thursday.
Overseas, Japan's Nikkei stock average fell 0.42 percent. Britain's FTSE 100 was down 0.06 percent, Germany's DAX index was down 0.05 percent, and France's CAC-40 was up 0.18 percent.
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