Frustrated by signs that an economic rebound will take longer to materialize, investors sold stocks lower Wednesday, backtracking from the optimistic advance Wall Street enjoyed just a day earlier.
The stock market has been alternating between rallies and retrenchment in recent sessions. Investors have been relieved when companies beat lowered earnings expectations and upset when firms say business is unlikely to improve for a while.
"The market is so tentative and . . . conviction is so low that this summer we are seeing most players put loose change to work rather than big bills. They are not making major commitments," said Alan Ackerman, executive vice president of Fahnestock & Co.
The Dow Jones industrial average finished down 36.56 points, or 0.3%, at 10,569.83, following a 134-point gain Tuesday on a string of positive earnings reports.
The broader market also fell, pulled down in particular by the tech sector as companies including Intel and Apple Computer indicated business could remain in a slump.
The Nasdaq composite index fell 51.15 points, or 2.5%, to 2,016.17. The Standard & Poor's 500 index declined 6.73 points, or 0.6%, to 1,207.71.
Wall Street was both comforted and unnerved by Greenspan's testimony on the economy before a congressional committee. Greenspan warned that the yearlong slowdown has not ended and said another interest rate cut might be needed to reinvigorate the economy.
Greenspan's rate-cut comment helped the Dow recover from an early 113-point loss.
The extent of investors' anxiety was apparent in their selling of IBM, a stalwart known for consistent earnings growth. IBM, a member of the Dow industrials, fell sharply, losing $4.25 to $104.28.
After the market closed, IBM reported earnings in line with analysts' estimates but said it has been hurt by weak demand here and abroad and will continue to suffer. It dropped a further $3.36 in extended-hours trading.
Many companies continue to say the business environment is so uncertain they can't predict when sales and earnings will bounce back. Intel, which said Tuesday that it couldn't forecast short-term results, fell $1.01 on Wednesday to $28.89. AOL Time Warner and Apple both have beat earnings projections, but AOL was off $4.80 to $44.65 and Apple shed $4.31 to $20.79--a 17% loss--after they reported downbeat revenue outlooks.
Declining issues outnumbered advancers nearly 9 to 7 on the New York Stock Exchange and by 3 to 2 on Nasdaq. Trading was active. In other market news:
* Argentine stocks, which tumbled 12% last week amid growing signs of economic strife, fell again Wednesday after bouncing back Monday and Tuesday. The benchmark Merval index of blue chips fell 4.3% to 325.25 amid jitters about a looming national strike.
Other overseas markets were also lower Wednesday. Japan's Nikkei stock average finished down 2.0% at 11,892.58, closing below the psychologically important 12,000 level for the first time since March. In Europe, Germany's DAX index fell 2.0%, France's CAC-40 dropped 2.2%, and Britain's FT-SE 100 declined 0.4%.
* Treasury securities rallied, driving yields to three-month lows, in response to Greenspan's comments that the Fed may cut rates again. The yield on the two-year Treasury note, which moves in the opposite direction of the price, fell to 3.92% from Tuesday's close of 4.08%. The yield on the benchmark 10-year note fell to 5.09% from 5.20% Tuesday.
Market Roundup: C7-8