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Stocks declined with Apple Inc.’s sales offering a late lift to technology stocks amid ongoing speculation about the Federal Reserve’s next interest-rate move, and on Procter & Gamble’s warning that rising commodity prices would dent profit. The Dow slipped and the broader market was mixed in which investors showed caution ahead of an expected interest rate cut from the Federal Reserve Wednesday.

The Dow Jones industrial average closed down 77.79 or 0.56% to 13,792.47, the broader S&P 500 closed down 9.96 or 0.65% to 1,531.02, and the tech-fueled Nasdaq composite closed down 0.73 or 0.03% to 2,816.71.

Market breadth Tuesday was negative. On the New York Stock Exchange, losers beat winners 9 to 7 on volume of 1.2 billion shares. On the Nasdaq, decliners topped advancers by 4 to 3 on volume of 2.2 billion shares.

It is evident that the market is waiting for the next shot in the arm and the Fed is likely to provide it tomorrow. Federal Reserve officials are expected to cut the fed funds rate by a quarter percentage point to 4.50%. The Fed cut rates last month by a half-percentage point in an attempt to both loosen up the credit market
and stop the housing market collapse from sending the broader economy into a recession. However, with oil prices near all-time records and gold prices near 26 year highs, concerns remain about pricing pressure and the strength of the consumer.

In economic news, October consumer confidence index fell to its lowest level in two years, versus forecasts for it to hold steady. Around 61% of the S&P 500 September quarter earnings have been reported, with growth on track to have fallen 0.9% from a year ago. That makes the quarter the weakest in at least five years.

Shares of Merrill Lynch closed down $1.86 or 2.76% to $65.56, after stating that Chairman and CEO Stanley O’Neal is retiring from the firm. This has come one week after the brokerage said it lost $8 billion in the third quarter due to bad mortgage bets. Write downs on home loans given to borrowers with poor credit and collateralized debt obligations - pools of bonds sold off in slices of varying credit risk - hurt performance and resulted in the company reporting its first quarterly net loss since 2001.

Stock of Procter & Gamble closed down $2.88 or 4.01% to $68.95, despite reporting higher quarterly earnings that edged expectations, and also issuing a current-quarter outlook that disappointed investors. Its net income grew to $3.08 billion, from $2.7 billion a year ago. Sales rose 8% to $20.2 billion from $18.79 billion a year ago, with internal growth contributing 5% of the increase.

Share of Boeing closed up $0.34 or 0.35% to $97.33, on news that it is boosting its share buyback plan by $7 billion and that it is announcing a quarterly dividend of 35 cents per share.

Stock of ON Semiconductor closed down $1.97 or 16.16% to $10.22, after the company reported lower third-quarter earnings that missed estimates and gave a fourth-quarter revenue forecast that is below analysts’ estimates.

U.S. light crude oil for December delivery fell $3.15 to settle at $90.38 a barrel on the New York Mercantile Exchange after settling at a record $93.53 a barrel Monday.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter