Markets Close Mixed Amid Earnings Fears
Earnings worries shifted Thursday from the tech sector to the blue-chip sector, leaving the stock market mixed once again.
Meanwhile, oil prices headed higher again amid fresh tensions between Iraq and Kuwait.
On Wall Street, the Dow industrials fell 94.71 points, or 0.9%, to 11,087.47, the lowest since Aug. 21.
But the Nasdaq composite added 19.97 points, or 0.5%, to 3,913.86.
Smaller stocks fared even better: The Standard & Poor’s index of 600 smaller shares jumped 1% to 224.41, near a record high.
The S&P; mid-cap index also was up sharply, gaining 1% to 545.40.
Overall, winners topped losers by a slight margin on the New York Stock Exchange and by 22 to 17 on Nasdaq.
Some investors may have been turning to smaller companies on expectations that those firms’ earnings growth may look better in the near term than growth at bigger firms.
In particular, sustained weakness in the euro currency is raising fears that many U.S. multinational companies’ third-quarter results will be below expectations.
Those fears also pushed some investors back to tech issues. In general, tech companies still are expected to have the most rapid profit growth this year.
Indeed, software giant Oracle said its fiscal first-quarter earnings more than doubled. The stock rose $3.13 to $84.94 in anticipation of the results, which were released after the market closed.
“With the recent inflation news being tame, there’s no reason to hold the consumer names over the techs,” said Gene Pisasale, who helps oversee $25 billion at Wilmington Trust Co. in Wilmington, Del.
Tech stocks had tumbled in spring in part on fears that rising inflation would send interest rates soaring, hitting stocks with high valuations.
In energy trading Thursday, crude oil futures rose for the first time in three sessions as reports of a U.S. refinery shutdown and tensions in the Persian Gulf spurred concern for low supplies.
Iraq accused Kuwait of stealing its oil, raising fears of a new confrontation in the gulf.
Near-term oil futures rose 25 cents to $34.07 a barrel in New York. Natural gas futures hit yet another high.
Among Thursday’s highlights:
* Blue chips were led lower by Colgate-Palmolive, which sank $8.75 to $47.44 after analysts warned about earnings weakness because of the euro.
In the Dow, stocks leading the index lower included Coca-Cola, down $1.50 to $51; Boeing, down $1.06 to $58.38; and 3M, down $1.50 to $85.
* Microsoft slumped $2.44 to $65.81 and Intel lost $1.63 to $59.63, but many big-name techs rose. Winners included Texas Instruments, up $3.13 to $60.13; Broadcom, up $18.06 to $236.56; and Gateway, up $2.02 to $60.72.
Also, Amazon.com rose $2.44 to $44.88 and EBay jumped $5.94 to $68.44. Goldman Sachs analyst Anthony Noto recommended investors buy shares of the online companies before executives meet with analysts next week.
* Many brokerage stocks gained on expectations of more consolidation in the industry. Merrill Lynch rose $2.88 to $71.69, Lehman gained $1.13 to $150.50 and National Discount Brokers jumped $2 to $36.69.
But Chase Manhattan lost 69 cents to $50 in the wake of its deal to buy J.P. Morgan. Morgan fell $2.50 to $179.
* Energy stocks were mixed. BP Amoco fell $1.31 to $54 and Sunoco fell $2.06 to $26.69, but Murphy Oil rose 94 cents to $65.50 and Kerr McGee gained $1.06 to $63.88.
* Among smaller stocks, many biotech names resurged. Abgenix gained $7.19 to $84.50, Affymetrix rose $4.94 to $69.50 and Millennium Pharmaceuticals rose $2.19 to $137.13.
Market Roundup: C7-8
