Wall Street slips as Intel pulls chip sector lower

Dow Jones: 12,446.88 (–58.88) Nasdaq: 2,781.91 (–20.71) SP 500: 1,313.64 (–5.85): US STOCKS fell for a third day yesterday, as Ireland's debt rating was cut to junk at Moody's Investors Service, overshadowing signs the Federal Reserve had not ruled out further stimulus efforts.

Semiconductor-related shares slumped, with Intel falling 1.8 per cent after Novellus Systems forecast lower-than-estimated third-quarter earnings. Alcoa slipped 1.3 per cent after second-quarter profit missed analyst estimates.

“There’s not a whole lot of conviction in the market,” said Jason Brady, a managing director at Thornburg Investment Management in Santa Fe, New Mexico.

“Most investors are following Europe, and they are waiting to see if the earnings season will be good enough for them to get excited about equity prices. If that doesn’t happen, then you can add corporate performance to the ugly mix,” he said.

Stocks advanced after the Federal Reserve released the minutes of last month’s meeting, as the report said policymakers continued to debate whether additional stimulus will be needed if the outlook for economic growth remains weak.

“The market rallied on the news that the Fed is certainly not ruling out further stimulus to further inflate the economy,” said Burt White, who helps oversee $330 billion as chief investment officer at LPL Financial in Boston.

The rally fizzled late in the day as Ireland’s credit rating was cut to non-investment grade by Moody’s, joining Portugal and Greece to become the third euro-area country to be lowered to junk.

Novellus tumbled 11 per cent to $31.75. Chairman and chief executive officer Rick Hill said that profit before certain costs in the current period will be 60 cents to 75 cents a share for the maker of machinery used in semiconductor production.

Microchip Technology fell 12 per cent to $32.93 for the biggest retreat in the SP 500. The maker of analog chips said sales and earnings for the quarter ended in June missed its forecasts.

Cisco, the largest networking-equipment company, rallied 1.1 per cent to $15.60.

Motorola Solutions dropped 1.3 per cent to $43.56.

Radiant Systems surged 30 per cent to $27.99. The maker of software for retailers was acquired by NCR for $28 a share.

– (Bloomberg/Reuters)