US market little changed in thin trading

A brokerage downgrade of several semiconductor companies pressured tech shares in New York today, while the broader market was little changed as a jump in jobless claims offset investors’ relief over declining oil prices.

Late summer trading is known for being thin, but with the Republican National Convention set for New York next week, Wall Street is even less crowded than usual for late August.

As many traders prepared to take the week off and some money managers planned to reduce staff levels, the market’s lack of conviction was reflected in low trading volumes. The drop in oil prices was a bright spot, however, although analysts weren’t sure it would hold.

“A week ago, people were asking where the top in crude is and now they’re asking where the bottom is,” said Todd Clark, head of listed equity trading at Wells Fargo Securities.

“It’s a sea change that’s welcome for equities, but against the backdrop of a big event next week that will keep players away from the market, it’s tough to get too excited.”

The Dow Jones industrial average closed down 8.33, or 0.1%, at 10,173.41.

The broader gauges were mixed. The Nasdaq composite index shed 7.80, or 0.4%, to 1,852.92. The Standard & Poor’s 500 index wiggled up 0.13, or 0.01%, to 1,105.09.

In economic news, the number of people who signed up for jobless benefits rose last week by a seasonally adjusted 10,000 to 343,000 economists had expected an increase of just 4,000.

At least half of those filing new claims were out of work because of Hurricane Charley, the Labor Department said.

Oil prices, which set a new record by topping 49 per barrel last week, have declined over the last five sessions as anxieties about global supply have eased.

On Thursday, the Organisation of Petroleum Exporting Countries indicated it would discuss ways to push prices down faster, perhaps through increased production, at its meeting next month.

Light crude for October delivery settled 37 cents lower at 43.10 a barrel on the New York Mercantile Exchange.

While the market has been fixated on energy costs lately, there were other concerns influencing trading. Investors were awaiting revisions to the government’s second quarter gross domestic product report, due Friday, and remarks from Federal Reserve chief Alan Greenspan at a banking conference in Jackson Hole, Wyo. The Republican convention, which starts Monday, also loomed large.

“The fear index might begin to rise over the next one or two trading days as the convention begins in New York,” said Peter Cardillo, chief strategist at S.W. Bach & Co.

“Unless the price of oil moves dramatically either way, I kind of think Greenspan, the GDP revision and the Republican convention will take the spotlight. And that will cause us to stay in a very tight, narrow trading range.”

Krispy Kreme Doughnuts Inc. sank 10 percent, or 1.59, to 13.77, after its earnings missed expectations by a wide margin. The company said it expects slower sales for the remainder of the year, and cut the number of new stores it plans to open next year.

Brown-Forman Corp, maker of Jack Daniel’s and Finlandia vodka, gained 38 cents to 46.75 after its quarterly earnings beat expectations on robust growth in its liquor business, offsetting weaker sales in its Lenox china division.

Advanced Micro Devices Inc. slumped 3.1%, or 38 cents, to 11.82, after Banc of America cut it to ”neutral” from “buy,” saying the chip cycle had come and gone prematurely, leaving companies in the industry with excess inventory.

The brokerage maintained its rating, but cut its price targets for several other companies, including Broadcom Corp., which lost 58 cents to 29.23, and Micron Technology Inc., which fell 20 cents to 11.83.

Dow component Merck & Co. shed 2.1%, or 97 cents, to 45.05, after health maintenance organisation Kaiser Permanente said it was reconsidering its use of the arthritis drug Vioxx because a major study found it could increase the risk of heart problems.

Advancing shares outnumbered decliners by about 5 to 4 on the New York Stock Exchange. Volume was light.

The Russell 2000 index, which tracks smaller company stocks, was down 2.89, or 0.5%, at 547.25.