Stocks waver on tech gains, consumer fears

Better-than-expected earnings at Oracle and Research In Motion buoy investor confidence. Consumer sentiment falls to its lowest level since August 2009. The cost of living increases.

By TheStreet Staff Sep 17, 2010 8:03AM

TheStreetBy Melinda Peer, TheStreet

 

Updated at 1:03 p.m. ET

 

Stocks were fluctuating as investors weighed strong earnings from technology companies and an unexpected decline in consumer sentiment.

 

At 1:03 p.m. ET, the Dow Jones Industrial Average ($INDU) was down 2.6 points at 10,592. The S&P 500 ($INX) was little changed at 1,125. The Nasdaq ($COMPX) was rising by 9.3 points, or 0.4%, to 2,313.

 

Stocks have been rallying in September as better-than-expected economic data have abated concerns of a second recession. However, investor enthusiasm is waning as the economic recovery appears to be slowing.


Yu-Dee Chang, chief principal at ACE Investment Strategy, said investors will have to be patient and ride out the weakness. 

 

"We cannot rush to see a nice recovery. The damage is just too much this time," Chang said.

 

The Thomson Reuters/University of Michigan consumer sentiment index fell to 66.6 this month, its lowest level in more than a year, down from 68.9 in August. Economists had expected the gauge to rise to 70.5. Consumer spending accounts for two-thirds of U.S. gross domestic product, and a weak sentiment reading implies that Americans could be reluctant to open their wallets.

 

Prices consumers pay for goods and services rose 0.3% in August after a similar increase in July, the Labor Department said. Excluding volatile food and energy prices, the core rate was unchanged, coming in slightly lower than the increase of 0.1% that economists had expected, according to Briefing.com. In July, the core rate rose 0.1%.

DuPont (DD) was the top-performing stock in the Dow, advancing 1.6%, followed by United Technologies (UTX) and Walt Disney (DIS). JPMorgan (JPM) was the benchmark's biggest laggard, falling 1.9%.

 

Technology stocks were rising after Oracle (ORCL) and Research In Motion (RIMM) reported better-than-expected quarterly results late Thursday. Oracle shares were jumping 7.2% to $27.18, while Research In Motion shares were climbing 1.9% to $47.40. 

 

Hewlett-Packard (HPQ) is close to picking a successor, possibly an internal candidate, to former chief executive officer Mark Hurd, Bloomberg reported. Hewlett-Packard shares were falling 1.9% to $39.60.

 

Johnson & Johnson (JNJ), which owns nearly 18% of Dutch biotech company Crucell (CRXL), will acquire the rest of the company for $2.3 billion. Johnson & Johnson shares were little changed at $61.28. Crucell shares were soaring 55% to $31.81.

 

Enterprise software company Novell (NOVL) is apparently in late-stage talks with at least two buyers -- including VMware (VMW) -- to sell the company in separate pieces, according to The Wall Street Journal. Novell shares were up 0.6% at $6.09, while VMware's were down 0.3% to $84.50.

 

Late Thursday, Texas Instruments (TXN) announced plans to increase its quarterly dividend by 8% and buy back $7.5 billion worth of its stock. The shares were rising 2.4% to $25.58.

 

Caterpillar (CAT) reported strong retail sales in August, with the North American region seeing the steepest uptick since the recession began rising 40%. The shares were up 1.2% at $72.88.

 

Blockbuster was in focus on reports that activist investor Carl Icahn is looking at having a bigger say in the company's restructuring as he holds over a third of its debt.

 

In commodity markets, crude oil for October delivery was falling by $1.01 to $74.57 a barrel.

 

The December gold contract, the most actively traded gold future, was rising by $4.70 at $1,278.50 an ounce. 

 

The dollar was gaining against a basket of currencies, with the dollar index down by 0.2%.

 

The 10-year Treasury note was up by 8/32, diluting the yield to 2.735%, following low inflation numbers and declining consumer confidence.  

 

The FTSE in London and the DAX in Frankfurt were each down 0.6%. Hong Kong's Hang Seng rose 1.3%, while Japan's Nikkei jumped 1.2%.

 

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