Stocks Ease as Profit News Turns Mixed
Wall Street’s ever-shifting love/hate affair with quarterly earnings reports turned modestly to the dark side Wednesday, as reports from Boeing and AlliedSignal spoiled this week’s stream of more reassuring profit reports.
The net effect was a modest sell-off in stocks, leaving the Dow industrials down 25.79 points at 8,034.65.
Without steep declines in Boeing and AlliedSignal, the Dow would have finished with a slight gain, extending its speedy recovery from last week’s sell-off.
In the broad market, losers topped winners by 17 to 12 on the New York Stock Exchange but by just a narrow margin in Nasdaq. The Nasdaq composite index slipped 4.46 points to 1,708.08.
Boeing startled investors by disclosing that the well-publicized bottlenecks at its overburdened factories have left the aerospace giant with an unexpected loss for the third quarter. Boeing shares dove $4.13 to $49.88.
AlliedSignal, meanwhile, reported a third-quarter profit that was only a shade below Wall Street forecasts, but it was the first time in recent memory that the diversified company, which also has aerospace interests, had come up short. The stock tumbled $3.25 to $40.25.
“AlliedSignal is a very predictable company, and it’s the first time in six years that they’ve missed an estimate,” said Thom Brown, market strategist for Philadelphia-based Rutherford, Brown & Catherwood.
On the other hand, he called Boeing’s situation an “aberration” rather than a long-term concern. “It’s a nice position to be in where you’re so busy you can’t get parts.”
Meanwhile, 3M and United Technologies stepped forward with better-than-expected results for the July-September period.
The reports sent 3M up $5.75 to $100.38 and United Technologies up 69 cents to $79.81.
Unlike the widespread selling spurred by last week’s profit disappointments from leading names such as Intel and Merck, the reverberations over Boeing and AlliedSignal were hardly perceptible in the broad market. The Standard & Poor’s 500-stock index fell 3.79 points to 968.49.
Still, Wednesday’s downturn served as yet another roadblock in the blue-chip sector’s struggle to fully recover from its summer downturn. The Dow peaked at 8,259.31 on Aug. 6.
“This is a market that’s full of crosscurrents and riptides, and every time it tries to swim upstream, it pulls back,” Brown said.
Among Wednesday’s highlights:
* Other defense stocks following Boeing and AlliedSignal lower included General Dynamics, down $1 to $83; Lockheed Martin, down $3.88 to $99.88; and Northrop Grumman, down $4.13 to $115.63.
* Drug stocks were strong. Bristol Myers gained $3.81 to $90.19, Warner Lambert rose $1.88 to $149 and Pfizer added $1.31 to $72.31.
* Tech stocks were mixed, with Intel down $1.19 to $83.15, Microsoft off $2.81 to $135.69 and Computer Sciences up $1.69 to $77.19.
Overseas, London and Paris stocks weakened, while Chinese shares dove with Hong Kong.
Some analysts said the continuing collapse of Asian stock markets probably is helping the U.S. market in the near term, as money from there seeks safer havens.
In currency trading, the dollar finished lower against the German mark, pulled down by weakness in U.S. bond and stock markets and a report that a Federal Reserve Board official said the dollar had reached its highs for now.
Caution ahead of today’s meeting of the Bundesbank’s policymaking Central Bank Council, which raised interest rates last week, also weighed on the dollar.
In commodities trading, oil prices closed sharply higher after a surprising drop in U.S. petroleum stocks and renewed fighting between Kurdish factions in northern Iraq sparked concern about supplies. At the New York Merc, crude oil for December delivery closed 56 cents higher at $21.42 a barrel.
Market Roundup, D8
