Markets mixed as U.S. starts new strikes
The markets waver throughout the day as investors mull the impact that the retaliatory attacks in Afghanistan will have on the U.S. economy.
The Nasdaq composite index inched up 0.65 points to close at 1,605.95, and the Dow Jones industrial average slipped 51.83 points to 9,067.94. Last week, the markets regained about 50 percent of the ground lost in the week after the Sept. 11 terrorist attacks against New York and Washington, D.C.
Trading was light and the bond market was closed for the Columbus Day holiday in the United States.
Stocks slipped in the early morning, something analysts attributed to temporary nervousness resulting from the U.S. air strikes, which began Sunday.
"The start of U.S. military action over the weekend could lead to a pullback or test in coming weeks prior to likely further gains in November-December and possibly into early 2002," Richard T. McCabe, a Merrill Lynch analyst, wrote in a research note.
Monday's weakness may also have been a result of last week's strong gains. Raymond James & Associates analyst Ralph Bloch said the market showed Friday that it was ready to pull back on its rally, but it also indicated strength.
The market was "correcting itself on an intraday basis--that's what all the up-down activity was about," Bloch said. "A market that does that is a strong one. It shows that buyers are lurking out there and that the sellers can't dominate at this point."
On the economic calendar, Monday marks the beginning of the third-quarter earnings season. Though economists say the U.S. retaliation will take a big toll on the economy, and some analysts have brought down their earnings forecasts, a few argue that stocks are cheap.
In a report, UBS Warburg analyst Edward Kerschner said that even in the ugliest case--which involves more terrorist activities, U.S. retaliation and plunging consumer confidence--stocks still look cheap. The analyst brought down his Standard & Poor's 500 operating earnings forecast for 2002 to $39 to $42 a share under this scenario, down 3 percent to 10 percent from 2001.
AT&T Wireless Services was one of the few companies to announce news on the Columbus Day holiday. Shares were off 52 cents to $15.60 after the wireless company said it would buy the 77 percent of TeleCorp it doesn't already own for $2.4 billion in stock. TeleCorp shares were up $3.50 to $13.54.
CNET's Telecom Equipment index was up almost 1 percent.
Shares of AOL Time Warner fell $2.06 to $31.75 over worries the media giant would be forced to buy back part of its stake in AOL Europe from German company Bertelsmann at well above the estimated market price. Bertelsmann has the right to sell 80 percent of its stake in AOL Europe for around $6.75 billion before Jan. 31, which is more than the value of the entire unit.
Semiconductor stocks were faring well Monday. Intel rose 28 cents to $22.24, and CNET's Semiconductor index was up almost 2 percent.
Among other actively traded techs, Oracle fell 30 cents to $13.90; Cisco Systems rose 11 cents to $15.05, and Microsoft rose 33 cents to $58.05.
Yahoo rose 14 cents to $10.49, and Amazon.com was off 8 cents to $7.12.
Staff and Reuters contributed to this report.