Tech, energy stocks keep markets in check

By Charley Blaine and Elizabeth Strott

Technology and commodity stocks were weak today, but a rally in financial stocks helped the overall market end the day mostly even.

It was the kind of day that makes bulls cheer. The Dow Jones industrials, which had been down as many as 100 points at noon ET, finished up 16 points to 11,533. The Standard & Poor's 500 Index was off 3 points to 1,275, and the Nasdaq Composite Index dropped 16 points to 2,334.

The market was buffeted by lower commodity prices and a decline in tech stocks for a third session in a row and a sixth session in the last 10.

Investors on Thursday will be closely watching August sales reports for many national retailers for a sense of consumers' financial health.

The market may get also pressured by a very weak earnings report from Hovnanian Enterprises (HOV, news, msgs), whose shares tumbled 7% in after-hours trading.

• Get free, real-time stock quotes on MSN Money

In addition, auto sales for August were weak, especially for pickups and sport utility vehicles. The Federal Reserve's Beige Book report, an anecdotal look at the economy, painted a picture of an economy struggling with weak consumer spending, weak real estate markets and inflationary pressures.

Technology shares were hit by worries that a rising dollar would make their products less competitive.

Intel (INTC, news, msgs) was the weakest of the 30 Dow stocks, down 4.6% to $21.54. Dell (DELL, news, msgs) was off 2.5% to $20.31, and Hewlett-Packard (HPQ, news, msgs) was off 2% to $45.09.

In addition, wireless stocks moved lower on reports that cell phone users trade in their phones more slowly than thought. Qualcomm (QCOM, news, msgs) fell 3.7% to $49.26, and Research In Motion (RIMM, news, msgs) fell 3% to $114.78.

But financial stocks came back at the close. Citigroup (C, news, msgs) rose 2.6% to $19.61. Wachovia (WB, news, msgs) moved up 3.2% to $17.18, and Washington Mutual (WM, news, msgs) added 3.8% to $4.40. Goldman Sachs (GS, news, msgs) added 1.4% to $167.61.

Lehman Bros. (LEH, news, msgs) jumped 5% to $16.94 after The Times of London reported that Japan's Mitsubishi UFJ Financial Group's main banking unit may enter the bidding for a stake in the struggling U.S. investment bank. Monday, Korea Development Bank said it was negotiating to buy a stake in Lehman Bros.

Crude oil finished at $109.35, down 36 cents from Tuesday as traders worried more about how much falling demand will affect prices. MasterCard's weekly Spending Pulse report on gasoline demand showed U.S. demand fell 1.6% from a year ago. The four-week change is down 4.1% from a year ago.

AAA's Daily Fuel Gauge Report put the national average retail price of gasoline at $3.681 a gallon, unchanged from Tuesday but down 10.6% from its peak on July 17.

Oil-and-gas platforms in the Gulf of Mexico appear to have sustained little damage from Hurricane Gustav, although production at many platforms has not been restarted yet.

Baker Hughes (BHI, news, msgs) said resuming normal operations after Hurricane Gustav hit the Gulf Coast was proving as difficult as after Hurricane Katrina in 2005. The stock was down 2.9% to $74.17.

Crude oil had been down to as low as $107.22 a barrel in New York before rebounding to $109.35. Crude's drop hit oil-and gas-production stocks as well as coal stocks. Anadarko Petroleum (APC, news, msgs) was off 1% to $59.08. Chesapeake Energy (CHK, news, msgs) was down 0.2% to $45.16.

Oil refiners were higher. Valero Energy (VLO, news, msgs) jumped 5.2% to $34.77.

Oil-and-gas platforms in the Gulf of Mexico appear to have weathered Gustav; ConocoPhillips (COP, news, msgs) and Royal Dutch Shell (RDS.A, news, msgs) both said today that the storm caused no damage to their platforms.

Gold, silver, copper, corn and wheat prices were all lower as well. The commodity sell-off hit such stocks as Freeport-McMoRan Copper & Gold (FCX, news, msgs), down 3.2% to $80.36; the stock has fallen about 11% in two days. Fertilizer company Potash of Saskatchewan (POT, news, msgs) was down 4.2% to $155.46, and coal producer Arch Coal (ACI, news, msgs) was off 5% to $43.89.

In addition, Joy Global (JOYG, news, msgs), which makes coal-mining equipment, was off 19.1% to $53.05 -- the biggest loser among stocks in the Nasdaq-100 Index ($NDX.X) -- after a strong earnings report and a boost in guidance. Goldman Sachs analyst Terry Darling triggered the selling when he wrote that he was concerned about narrowing profit margins and the rising dollar's effect on profits.

Aluminum giant Alcoa (AA, news, msgs) dropped 2.2% to $29.80.

Seventeen of the 30 Dow stocks showed gains on the day, along with 259 S&P 500 stocks. But only 36 stocks in the Nasdaq-100 Indexwere higher.

Energy prices -- New York close

	Wed.	Tues.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$109.35	$109.71	-$0.36	-5.29%	13.93%
Heating oil (per gallon)	$3.0788	$3.0736	$0.0052	-3.24%	16.21%
Natural gas (per million BTU)	$7.2640	$7.2610	$0.0030	-8.55%	-2.93%
Unleaded gasoline (per gallon)	$2.7668	$2.7337	$0.0331	-8.08%	11.08%

Oil will test $100, may head lower

Traders are betting on lower prices for now.

"Weakening global demand appears to be the key factor pulling down crude oil prices (although the surge in the dollar is helping as well)," Michael Darda, chief economist at trading and research firm MKM Partners, wrote in a note to clients this morning.

Energy analyst Peter Beutel wrote in his daily note to clients that the production loss from Gustav didn't faze the markets. "Had that happened in late June or the first days of July, prices would have spiked dramatically higher," he said.

Beutel expects oil prices to retreat to between $69 and $80. His view may be more extreme. Many traders and investors, including T. Boone Pickens, believe crude won't fall under $100 a barrel. They see members of the Organization of Petroleum Exporting Countries agreeing to cut production to defend world oil prices when the cartel meets Tuesday in Vienna.

• Jon Markman: $65 oil is coming

Homebuilder Hovnanian's big loss

After the close, home builder Hovnanian reported a big third-quarter loss, suggesting that a bottom for the housing market is a ways off.

Hovnanian shares fell 7% to $7.21 in after-hours trading. In regular trading, the stock had closed up 4.9% to $7.75. The shares are down 89% from their peak in July 2005.

The company said it lost $202.5 million, or $2.67 per share, compared with a loss of $80.5 million, or $1.27 per share a year ago. Analysts had predicted a loss of $1.68 per share.

Sales for the quarter, which ended on July 31, fell to $716.5 million from $1.1 billion a year ago as contracts, excluding unconsolidated joint ventures, fell 38% to 1,584 homes, and would-be buyers canceled contracts at a 32% rate. The cancellation rate offered a touch of good news: It was down from 35% a year ago.

Hovnanian, the nation's sixth-largest builder, said the quarter included pretax charges of $111.7 million for the lower value of land and inventory and other items.

In addition, deliveries of 2,185 homes, were down 31% from a year ago, and contracts to buy homes fell 31% to 1,584 homes.

Its gross profit margin was 8.5%, down from 15.9% a year ago.

The company said results were hit hard by a housing market dominated by rising foreclosure rates and ballooning inventories of existing homes for sale. In addition, the company said buyers are having more trouble getting new mortgages.

Auto sales aren't pretty

Everybody said August would be a lousy month for automakers. They were right.

Overall, auto sales fell for a 10th straight month.

• Ford Motor (F, news, msgs) sales were down 27% from a year ago. Ford sold 155,690 vehicles, down from 212,120 units a year ago. Ford closed up 1.3% to $4.57.

• General Motors (GM, news, msgs) sales were off 20% from a year ago to 308,817 -- but up 31% from July's dismal sales. GM closed up 5.8% to $11.27.

• Chrysler sales fell 34.4% to 110,235 vehicles. Chrysler is majority owned by Cerberus Capital.

• Toyota (TM, news, msgs) sales were off 9.4% to 211,533. Toyota shares were up 1.4% to $90.04 in New York.

• Nissan (NSANY, news, msgs), meanwhile, reported a 13.6% gain in sales to 108,493. Nissan shares closed up 2.2% to $15.50 in New York.

• Honda Motor (HMC, news, msgs) sales fell 7.3% to 146,855 units. Shares jumped 4.6% to $32.80.

For nearly all the automakers, pickup and SUV sales slumped, while gains came from smaller, more fuel-efficient vehicles. Honda reported an 8.3% drop in sales of its luxury Acura brand vehicles.

The annual selling rate for August, according to Autodata, was 13.7 million units, up slightly from a year ago. It was also up 8.7% from July's rate of 12.6-million units. July sales collapsed as crude oil soared to an all-time high of $147.27 on July 11.

Hedge fund firm Ospraie closes flagship fund

Hedge fund Ospraie Management announced this morning that it is closing its flagship commodity fund after suffering major losses.

The fund has lost 40% of its value so far this year, including a 27% loss in August after oil prices fell more than 10% in the same period.

"The losses were primarily caused by a substantial sell-off in a number of our energy, mining and resource equity holdings during a six-week period characterized by some of the sharpest declines in these sectors in the past ten to twenty years," fund manager Dwight Anderson wrote in a letter to investors. "After nine years of striving to be a good steward of your capital, I am very sorry for this outcome," Anderson wrote.

Lehman Bros. bought a 20% stake in the Ospraie Fund in 2005.

Mixed news on factory orders, unemployment

The markets got some upbeat economic news from a factory-orders report this morning.

Orders grew at 1.3% in July, the Commerce Department reported this morning -- better than the 0.4% increase economists were expecting. Factory orders for June were revised higher to 2.1% from a previously reported 1.7% gain.

The report was "yet another sign that the manufacturing sector is faring better than one might expect in the midst of a deep recession in housing," Nomura Chief Economist David Resler wrote in a note this morning. "While some of the gain may reflect higher prices (e.g., steel, petroleum, food, and other basic commodities), the growth in demand for manufactured goods is an encouraging sign that the industrial sector is continuing to provide support for overall economic growth."

Meanwhile, consulting firm Challenger, Gray & Christmas offered some mixed data about the unemployment picture. The firm's monthly report showed that employers have announced 667,996 job cuts in 2008 so far, a 29% increase from the 2007-to-date total of 515,855. Things brightened in August, however, with employers announcing 14% fewer planned job cuts in August than in July.

The government will release its August jobs report on Friday, before the opening bell. Economists expect an eighth straight month of job losses.

Corning, Staples struggle

Shares of Corning (GLW, news, msgs) slumped 12.6% to $17.05 after the company cut its third-quarter sales and earnings forecast today.

The company cited slowing shipments of glass used in liquid crystal display televisions.

Corning said earnings will fall between 43 cents and 45 cents per share; sales will range between $1.58 billion and $1.62 billion.

Analysts expect 49 cents per share on $1.7 billion in sales.

Staples (SPLS, news, msgs) this morning reported a 16% drop in fiscal-second-quarter profit as companies pulled back on spending.

The office-supply retailer said net income came in at $150.2 million, or 21 cents per share, matching analysts' expectations, and the company reiterated its 2008 profit guidance for low-single-digit growth.

Shares of Staples rallied anyway, finishing up 1.7% to $25.18.

Coca-Cola taps China

Coca-Cola (KO, news, msgs) this morning said it offered $2.5 billion to buy Chinese juice maker China Huiyuan Juice Group.

If the deal goes through, it would be the biggest acquisition of a Chinese-controlled company by a foreign one, according to data from Thompson Reuters. The deal would help Coke expand its Chinese product line beyond carbonated beverages.

Coca-Cola also announced a $1 billion share buyback.

The stock was down 0.6% to $51.66.

Apple announces mystery event

Next week is going to be a big week for Apple (AAPL, news, msgs) lovers.

• Top Stocks blog: A big change ahead for the iPod?

The company late Tuesday sent out an invitation to an event called "Let's Rock." Analysts expect Apple to introduce newer versions of its popular iPhone and iPod devices.

Gene Munster, an analyst with Piper Jaffray, told clients the product announcements will be key to Apple's holiday season.

"We just thought it was going to be an updated version of the iPod Touch, but they may have something even more interesting to show," Munster said.

Apple debuted its iPhone and iPod at events that were similarly secretive.

Apple shares closed up 0.5% to $166.96.

Short hits from the markets -- 4 p.m.

	Wed.	Tues.	Chg.	Month chg.	YTD chg.
Treasurys
13-week Treasury bill	1.665%	1.650%	0.015	-1.48%	-46.97%
5-year Treasury note yield	2.940%	2.996%	-0.056	-4.82%	-14.91%
10-year Treasury note yield	3.697%	3.746%	-0.049	-3.04%	-8.38%
30-year Treasury bond yield	4.318%	4.362%	-0.044	-2.13%	-3.16%
Currencies
U.S. Dollar Index	78.165	78.140	0.025	0.86%	1.92%
British pound in dollars	$1.7753	$1.7828	-0.0076	-2.54%	-10.76%
Dollar in British pounds	£0.5633	£0.5609	0.0024	2.60%	12.05%
Euro in dollars	$1.4491	$1.4522	-0.0032	-1.25%	-0.85%
Dollar in euros	€ 0.6901	€ 0.6886	0.0015	1.26%	0.86%
Dollar in yen	108.33	108.58	-0.25	-0.40%	-3.15%
Canadian dollar in U.S. dollars	$0.942	$0.937	$0.0041	0.11%	-5.18%
U.S. dollar in Canadian dollars	$1.063	$1.068	-$0.0049	-0.12%	5.46%
Commodities
Gold	$808.20	$810.50	-$2.30	-3.23%	-3.56%
Copper	$3.3120	$3.2730	$0.04	-2.21%	8.91%
Silver	$12.9470	$13.1450	-$0.20	-5.54%	-13.22%
Corn	$5.4650	$5.5300	-$0.07	-3.83%	19.98%
Crude oil (NYMEX) (per barrel)	$109.35	$109.71	-$0.36	-5.29%	13.93%