After showing considerable strength earlier in the session, Wall Street ended Tuesday's session lower, pulled down by weakness in the resource and tech sectors. A sharp drop in oil prices contributed to the strength early on.
Stocks got a boost in early trading following a sharp drop in oil prices. While crude prices pared some of their losses, they still closed down below the key $110 a barrel mark, down $5.75 at $109.71 a barrel.
Experts say Hurricane Gustav, which was downgraded to a tropical depression, did not cause significant damage to the oil region. New Orleans was spared a direct hit as the storm arrived on Monday weaker than many had feared.
While the broader markets initially rallied on the drop in oil prices, weakness in the commodity sector overwhelmed the positive sentiment, sending stocks lower.
Additionally, some weakness in the technology sector contributed to the afternoon sell off. Gilead Sciences (GILD) was one of the biggest decliners in the tech sector. Earlier in the day, an analyst at Banc of America downgraded the stock to a Neutral rating, while also cutting the stock's price target to $56 from $59. Shares of the biopharmaceutical company closed down 4.6 percent.
In an interview with RTT News, Todd Leone, managing director of equity trading at Cowen & Co. discussed Tuesday's early rally and afternoon sell off, which he called "perplexing." Despite September being known as a tough month for the stock market, Leone expects stocks to stabilize later in the month and then move higher.
Earlier in the day, the financial sector got a boost on reports that Lehman Brothers (LEH) is in talks with Korea Development Bank regarding an investment in the company. Reports said that Lehman Brothers expects to have a discussion with Korea Development Bank about a capital injection of as much as $6 billion. Shares of Lehman Brothers ended the session up 0.3 percent.
Meanwhile, Fitch Ratings downgraded the preferred stock ratings of Fannie Mae (FNM) and Freddie Mac (FRE) while projecting that the firms will not be profitable for fiscal years 2008 and 2009. While Fitch believes capital at both firms remains adequate for the intermediate term, the capital markets have significantly discounted the value of both common and preferred stocks, effectively limiting any potential issuance from either government sponsored entities, or GSE.
In other news, Google Inc. (GOOG), owner of the Internet's most popular search engine, said it plans to launch its own Web browser in an apparent move to take on Microsoft Corp.'s (MSFT) Internet Explorer.
In merger and acquisition news, Sciele Pharm (SCRX) said it entered into a definitive agreement to be acquired by Japanese pharmaceutical manufacturer Shionogi & Co., Ltd. (SGIOF.PK) for a total equity price of about $1.1 billion. Under the agreement terms, Shionogi will buy shares of Atlanta, Georgia-based pharmaceutical company Sciele through a cash tender offer at a price of $31 per share. Shares of Sciele Pharm closed up 59.2 percent.
On the economic front, the Institute for Supply Management released the results of its manufacturing survey that showed activity in the manufacturing sector experienced a slight contraction in the month of August, although the report also showed a slowdown in the pace of price growth.
At the same time, the Department of Commerce released its report on construction spending in the month of July, showing that spending decreased by a little more than economists had been expecting due in part to continued weakness in spending on residential construction.
While the major averages ended the session well off of their earlier lows, they still closed with notable weakness. The Dow closed down 26.63 points or 0.2 percent at 11,516.92, the Nasdaq closed down 18.28 points or 0.8 percent at 2,349.24 and the S&P 500 closed down 5.26 points or 0.4 percent at 1,277.57.
For comments and feedback contact: editorial@rttnews.com
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.