US stocks: Thailand coup scares markets

NEW YORK - US stocks fell on Tuesday as internet shares dropped after Yahoo Inc.'s warning about its quarterly outlook and a military coup in Thailand rattled global markets.

Yahoo's stock, down 11.2 per cent, was the heaviest weight on the Nasdaq, which snapped a seven-session streak of gains.

The Thai army took control of Bangkok on Tuesday without a shot being fired, dismissed the prime minister and revoked the constitution in the country's first coup in 15 years.

US crude oil prices resumed their decline and slipped below US$62 for the first time in nearly six months. Thathis coup in Thailand, which has everyone unsettled. Then the fundamental issue is Yahoo," said Phil Orlando, chief portfolio manager at Federated Investors in New York. "This is one of the first major companies outside of housing and autos that is suggesting to us that the third-quarter numbers might be softer than we thought."

The Dow Jones industrial average was down 14.09 points, or 0.12 per cent, to end at 11,540.91. The Standard & Poor's 500 Index was down 2.87 points, or 0.22 per cent, to finish at 1,318.31. The Nasdaq Composite Index was down 13.38 points, or 0.60 per cent, to close at 2,222.37.

Yahoo's chief financial officer said the Web search company's advertising growth would slow and that its third-quarter revenue will be at the bottom half of a previous forecast.

Yahoo shares dropped 11.2 per cent, or US$3.25, to US$25.75, while shares of rival Google Inc. slid 2.6 per cent, or US$10.88, to US$403.81. Web auctioneer eBay Inc. was down 3.3 per cent, or 89 cents, at US$25.95. The Morgan Stanley internet Index fell 2.1 per cent.

Shares of microchip manufacturers also fell on concerns that demand would suffer from weak consumer spending as Maxim Integrated Products Inc. lowered its quarterly earnings and revenue forecasts. Maxim shares lost 4.9 per cent, or US$1.53, to close at US$29.84 on Nasdaq.

In an indication of a potential turnaround for tech shares on Wednesday, shares of Oracle Corp. rose 5.5 per cent to US$17.01 after the bell as the software company's first- quarter profit topped Wall Street's forecasts.

During the regular session, Oracle's shares fell 0.7 per cent, or 12 cents, to close at US$16.13 on Nasdaq.

On the New York Stock Exchange, shares of Exxon Mobil dropped 1.2 per cent, or 80 cents, to US$65.50, after US crude prices abruptly turned lower midday amid ample supplies.

Crude oil for October delivery slid US$2.14, or 3.4 per cent, to settle at US$61.66 a barrel.

Tamer-than-expected US inflation data and fresh signs of weakness in housing also stoked fears of an economic slowdown.

A report showed producer prices rose less than expected in August, while core prices fell, and the Commerce Department reported the pace of US home building fell more sharply than expected in August.

"That much of a cooling in inflation pressures signals a real slowing in the rate of growth, suggesting that the Fed may have already raised rates too far," said Chip Hanlon, president of Delta Global Advisors in Huntington Beach, California.

Trading was moderate on the New York Stock Exchange, where about 1.51 billion shares changed hands, below last year's daily average of 1.61 billion. On the Nasdaq, about 2.13 billion shares traded, above last year's daily average of 1.80 billion.

Declining shares beat advancers on the NYSE by a ratio of more than 9 to 7, and on Nasdaq, about three stocks fell for every two that rose.

- REUTERS