Dow Off 45 Amid New Worries Over Earnings
Stocks suffered some profit-taking Wednesday, halting a record-setting streak, as investors grappled with renewed worries about corporate earnings, a concern sure to be heightened by a late warning from Intel.
The Dow Jones industrial average fell 45.59 points to 8,539.24, ending a five-session string of record highs that had added 215 points to the blue-chip barometer.
Most broad-market indicators also posted modest losses, although the technology-heavy Nasdaq market managed a small gain.
The Dow was tugged lower by a big loss from Disney, which slid $3.13 to $106.88 after two Wall Street firms lowered their forecasts for the media conglomerate’s earnings for the current quarter.
But the most unsettling development of the day came after the closing bell with a profit warning from Intel--the type of high-profile announcement that frequently sends the market into convulsions.
Wednesday’s losses in stocks came despite a strong bond market, where a key long-term interest rate edged down toward 6% after jumping over that mark for the first time since December on Monday.
Bonds were pressured on Monday and Tuesday by strong economic readings which suggested that the continuing financial crisis in Asia may not slow a resilient U.S. economy enough to keep inflationary pressures in check.
The sudden shift in perception has undermined expectations that the Asian slowdown might even force the Federal Reserve Board to lower its key lending rates to stimulate the U.S. economy.
The key 30-year Treasury bond rose, lowering its yield to 6.02% from 6.07% at Tuesday’s close.
Declining issues outnumbered advancers by a 7-to-5 margin on the New York Stock Exchange, where volume totaled 644.28 million shares, up from Tuesday’s pace.
The Standard & Poor’s 500-stock index list fell 4.69 points to 1,047.33, and the NYSE composite index fell 2.43 points to 544.46.
Among Wednesday’s highlights:
* Drug makers faltered. American Home Products fell $2.81 to $91.75, dragging down others, after safety concerns caused it to withdraw its application for federal approval of its new hypertension drug. Merck fell $1.94 to $124.88 and Johnson & Johnson dropped $1.19 to $73.31.
Drug distributors were mixed after the Federal Trade Commission voted to block two mega-deals on Tuesday. Bergen Brunswig lost $2.56 to $40.13 over its proposed acquisition by Cardinal Health, which rose 81 cents to $79.81. The FTC also voted to challenge McKesson’s bid for AmeriSource Health, up 94 cents to $57.69. McKesson rose 75 cents to $54.
* Kmart rose $1.31 to $14.75 after the discount retailer reported profit before a charge of 50 cents a diluted share for the fourth quarter ended Jan. 31. It had posted a loss for the year-ago quarter.
Overseas, Tokyo’s Nikkei stock average fell 0.4%, Frankfurt’s DAX index fell 1.0% and London’s FTSE-100 fell 1.3%.
Market Roundup, D8
