Street's Winning Streak Ends

From Times Wire Reports

A warning from Hewlett-Packard about its growth prospects and concerns about weakness in the banking sector Wednesday prompted investors to cash in profits, ending a four-session winning streak on Wall Street.

Although investors know earnings and revenue in general will continue to be weak throughout this year, Hewlett-Packard's warning served as another reminder to remain cautious, analysts said.

The Dow Jones industrial average ended the session down 105.60 points, or 0.9%, at 11,070.24. Investors also pulled back from the broader market. The Nasdaq composite index fell 15.93 points, or 0.7%, to 2,217.73, and the Standard & Poor's 500 index lost 13.54 points, or 1.1%, to 1,270.03.

Declining issues outnumbered advancers by about 3 to 2 on Nasdaq and the New York Stock Exchange on moderate volume.

HP fell $1.34 to $28.71 and weighed down much of the tech sector after Chief Executive Carly Fiorina said the company experienced soft sales in May, in part due to a global technology slowdown that is expanding beyond the United States and Europe. The company now expects revenue to be flat or down 5% for its fiscal third quarter, which ends July 31.

Among other tech shares posting losses were Dell Computer, down 96 cents at $25.26, and Cisco Systems, off 78 cents at $20.76.

HP's announcement was another in a litany of second-quarter profit warnings. Many investors have chosen to ignore those warnings this spring, focusing instead on the Federal Reserve's aggressive campaign to cut interest rates.

"We should be expecting it. We know that second-quarter earnings are going to be as bad as the first," Arthur Hogan, chief market analyst at Jefferies & Co, said of the HP news. But "it is catching us off guard for some reason today," he said.

The effects of the slowing economy, which have been unforgiving in some sectors, dragged down financial stocks. Bank One slipped 9 cents to $38.96 after UBS Warburg downgraded its rating on the stock.

J.P. Morgan Chase fell $1.66 to $46.84 after it acknowledged in a filing with the Securities and Exchange Commission that second-quarter business has remained weak, particularly for its investment banking operation.

"It appears there are plenty of corporate earnings disappointments ahead. In fact, truly nice surprises in corporate earnings seem to be an endangered species," said Alan Ackerman, executive vice president of Fahnestock & Co.

In other blue-chip sectors, such as oil and steel, profit taking was apparent after the market's most recent surge, which began last Thursday. ExxonMobil fell $2.15 to $89.40, while oil services company Halliburton fell $2.40 to $45, giving up gains made Tuesday when OPEC agreed to leave its official oil output unchanged for the time being.

At the New York Mercantile Exchange, crude oil for delivery in July closed 52 cents lower at $27.72 a barrel and July gasoline closed 2.50 cents a gallon lower at 88.04 cents. Gasoline futures have fallen about 25% in the last two weeks from an all-time high of $1.175 a gallon on May 24.

The American Petroleum Institute reported Tuesday night that U.S. crude oil stocks rose 3.4 million barrels last week amid hefty imports. U.S. crude stocks are now 28 million barrels more than they were this time last year. Gasoline stocks rose 3.2 million barrels to their highest level since July 1999, the API said.

Analysts said the stock buildups were removing any immediate concerns regarding Iraq's decision to shut off crude exports.

Steel stocks fell after soaring Tuesday when President Bush said his administration will seek approval for limits on steel imports. USX-U.S. Steel Group fell 67 cents to $21.07, Bethlehem Steel shed 15 cents to $4 and Nucor was off $2 to $54.

Profit-taking also hit drug stocks. Eli Lilly lost $1.11 to $86.99 and Abbott Labs fell $1.15 to $5170.

But HMO shares rallied. WellPoint gained $1.98 to $89.15 and UnitedHealth rose $1.28 to $58.40.

The bond market was little changed. Yields have slid in recent sessions on renewed optimism that the Fed might cut rates further in coming months.

Market Roundup, C7, C8

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