U.S. stocks slump

U.S. stocks fell Tuesday as oil prices climbed to their highest in more than a month and a handful of companies in Canada and the U.S. warned that earnings would not meet expectations.

Canada's benchmark index closed nearly unchanged as oil and gas stocks climbed with the price of crude, offsetting declines among financial services stocks and tech-related companies.

Wi-LAN Inc. tumbled 17 per cent in Toronto after the wireless gear maker said it will report a loss this year rather than the profit expected by analysts and investors. In U.S. trading, semiconductor stocks dropped after chip maker Conexant Systems Inc. warned and Lehman Brothers cut its recommendation on several other semiconductor companies.

Lehman Brothers also lowered its profit estimates on Intel Corp.

The S&P/TSX composite index ended the day down 1.26 points or 0.01 per cent to 8,484.74 with gainers outpacing decliners by 111 to 102. The index energy stocks rose 27.64 points to 1,626.62.

The Dow Jones industrial average fell 63.49 points or 0.62 per cent to 10,219.34. The Nasdaq composite index slid 43.23 points or 2.15 per cent to 1,963.43, while the Standard & Poor's 500 index dropped 9.19 points or 0.82 per cent at 1,963.43.

In New York, light, sweet crude futures for August delivery surged $1.26 (U.S.) or 3.28 per cent to $39.65, their highest close since June 2.

The move higher follows weekend pipeline attacks in Iraq, which cut production and left workers struggling to repair the damage on Monday. A strike by oil workers in Nigeria also contributed to the advance.

Concerns about the state of Russian oil giant Yukos factored into the latest increase. On Monday, the company received notification that it was in default on $1-billion (U.S.) credit, pushing it a big step closer toward bankruptcy.

Conexant Systems sank 43 per cent Tuesday to its lowest level in more than a year after the company cut its third quarter revenue and earnings forecast on weakness at its wireless network business.

On the Nasdaq, the stock tumbled $1.77 (U.S.) to $2.31 on a volume of 124.8 million shares compared with an average daily trading volume of 11 million shares. The stock last closed below that level in May 2003.

The decline came after the Red Bank, N.J.-based semiconductor maker cut its third-quarter revenue outlook to between $265-million (U.S.) and $270-million from its previous range of between $308-million and $323-million.

Tuesday's warning also came as Lehman Brothers Inc. cut Conexant stock to "equal weight" from "overweight" as part of a broader call on a series of semiconductor companies.

The brokerage also lowered its ratings on Applied Micro Circuits Corp., PMC-Sierra Inc. and Vitesse Semiconductor Corp. Those ratings were also cut to "equal weight" from "overweight."

Veritas Software Corp. dropped 36 per cent to $17 after the company warned that it would miss forecasts for the second quarter. 

In Canada, Noranda Inc. shares rose 30 cents to $23.10 following a Globe and Mail report saying that four international companies are still in the running to buy the miner. Brazil's Companhia Vale do Rio Doce is said to be the front runner.

Also on Bay Street, Wheaton River Minerals Ltd. and Iamgold Corp. are both holding investor meetings this morning to seek shareholder approval for their planned merger.

The two sides have been attempting to fend off unsolicited bids from U.S. miners Coeur d'Alene Mines Corp. — which is bidding for Wheaton — and Golden Star Resources Ltd, which is taking a run at Iamgold.