US stocks drop as tech stocks weak

By Kristin Roberts

NEW YORK: Trading was subdued but in line with recent trends as consumer products and a few others shot lower, along with some weakness in technology stocks that pulled all major indexes down. Stocks fell on Thursday as an earnings warning by consumer products giant Procter & Gamble and cautious comments from Wall Street analysts prompted profit-taking ahead of a new set of economic data due on Friday.

The Dow Jones industrial average lost 144.14 points, or 1.33 per cent, at 10,668.72 - dragged down by shares of Procter & Gamble following the company's profit warning. J.P. Morgan & Co., Honeywell International and United Technologies also dropped. Weakness in tech leaders Microsoft Corp. and Intel Corp. pulled the Nasdaq composite into negative territory, with the index ending down 13.70 points, or 0.36 percent, at 3,825.56.

Microsoft was the most actively traded stock, closing down 1-11/16 at 68-13/16 a day after a U.S. judge ordered the software giant be split in two. Broader measures of the market also edged lower, with the Standard & Poor's 500 index down 9.69 points, or 0.66 per cent, at 1,461.67 while the Wilshire 5000 lost 79.80 points, or 0.58 per cent, at 13,645.54. "The Dow had a pretty good run for a while," said capital markets managing director Arnie Owen.

Electronic Data Systems Corp. was also heavily traded, falling nearly 8 percent after Merrill Lynch cut its revenue growth forecast for the computer services company to 4 per cent from 7 per cent. The stock closed down 5-3/8 at 57-13/16.

Wall Street was looking ahead to producer price data on Friday morning for hints on the Federal Reserve's next interest-rate decision, traders said. Economists expect the overall Producer Price Index to show an increase of 0.3 percent in May, according to economists. A recent string of economic figures offered signals that the economy was slowing, which in turn sparked hopes among investors that the Fed may be less aggressive in its campaign against inflation.

But this week, a number of US central bankers have come to the fore, saying the evidence of a slowdown is not yet convincing. In separate appearances and interviews, Fed officials have said they are encouraged by recent data but that a few government reports are just not enough to call it a trend.

Honeywell International Inc. fell 2-5/16 to 51-1/2 while United Technologies was off 3-1/16 at 56-15/16.

Bond prices gained as money came out of stocks. The 10-year U.S. Treasury note gained 5/32, pushing the yield down to 6.13 per cent from Wednesday's close at 6.15 per cent. The 30-year bond rose 7/32, with the yield at 5.89 per cent, down from Wednesday's 5.91 percent.

Reuters Limited 2000.