Another series of attacks in London unnerved Wall Street yesterday, sending stocks lower as investors looked past strong earnings and China's...
NEW YORK — Another series of attacks in London unnerved Wall Street yesterday, sending stocks lower as investors looked past strong earnings and China’s decision to revalue its currency.
The Dow Jones industrial average dropped 61.38 to 10,627.77.
Microsoft, one of the 30 Dow stocks, gained 25 cents to close at $26.44 a share yesterday before announcing its fourth-quarter earnings. Its shares gave back 49 cents in after-hours trading after investors found its earnings guidance unexciting.
Boeing, also a Dow stock, dropped 37 cents to $65.71.
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Broader stock indicators were narrowly lower. The Standard & Poor’s 500 index fell 8.16 to 1,227.04, and the Nasdaq composite index slipped fell 9.97 to 2,178.60. Both the S&P and Nasdaq set new four-year highs Wednesday.
“I think the London incident gave investors an excuse to take some money off the table after reaching new highs yesterday,” said Peter Cardillo, chief strategist and senior vice president at S.W. Bach. “Otherwise, the news was outstanding. The China revaluation is great news, and a step in the right direction. Earnings are coming in better than expected. Oil is down. But London gave the markets some jitters, certainly.”
China’s news that it would float its currency against a basket of other currencies was seen as positive — possibly giving U.S. exporters more opportunities in China. The move was also seen as a boon to blue-chip companies, many of which have benefited from China’s economic boom. Bonds fell sharply, however, on fears that higher import prices could spur inflation.
Federal Reserve Chairman Alan Greenspan hailed China’s move as a good first step, and reiterated his bullish outlook on the economy in a second day of congressional testimony. His forecast was backed by the latest reading of the Conference Board’s index of leading economic indicators, which rose 0.9 percent in June, the largest increase since December 2003.
In addition, the Labor Department reported first-time jobless claims fell sharply, down 34,000 to 303,000 last week. Investors welcomed the report as a sign of continued economic growth. And oil prices fell as fears of hurricane damage in the Gulf of Mexico eased, with a barrel of light crude at $57.13, down 89 cents, on the New York Mercantile Exchange.