Dow Retreats on Citigroup Earnings
Disappointing earnings from Citigroup set off more selling on Wall Street on Monday as investors, still unimpressed by first-quarter reports, shied away from commitments to stocks.
Trading volume was light, a reflection of investors’ unwillingness to participate until corporate forecasts become less murky. Analysts said that until companies start to express confidence that business is improving, a rally will be unlikely.
“So far, earnings have not created a catalyst, there’s no dramatic guidance to think the future’s going to be better, and then you have this overhang in the Middle East,” said Larry Wachtel, a market analyst at Prudential Securities. “No one is emboldened to step up to the plate in an environment like this.”
The Dow Jones industrial average closed down 97.15 points, or nearly 1%, at 10,093.67, while the broader Standard & Poor’s 500 index fell 8.46 points, or 0.8%, to 1,102.55. It was the lowest close since Feb. 22 for both indexes. The tech-focused Nasdaq composite index slipped 2.41 points, or 0.1%, to 1,753.78.
Losers outnumbered winners by 5 to 4 on the New York Stock Exchange and by 8 to 7 on Nasdaq.
Investors had hoped that this week’s profit reports, which include some of the country’s biggest and most important companies, would provide momentum for a flagging market. The message Monday was definitely mixed.
Dow component Citigroup fell $1.18 to $45.92 after reporting first-quarter results that fell below Wall Street’s expectations because of losses in its Argentine holdings. Fellow Dow member General Electric, which reported disappointing profit last week, fell $1.70 to $31.85 on renewed concerns about its earnings prospects.
However, Eli Lilly met analysts’ expectations despite reporting its third consecutive quarterly earnings decline of more than 20%, and the drug maker’s shares gained $1.78 to $75.20.
Among tech stocks, Intel, which is set to release earnings today, lost 28 cents to $28.11. The chip maker is considered a bellwether for the sector, and analysts and investors are waiting to hear what the company has to say about the future.
Despite Intel’s loss, the SOX index of semiconductor stocks rose 2%, reflecting gains by Applied Materials, up 84 cents to $51.44.
After the market closed, Texas Instruments reported first-quarter results slightly above expectations and expressed optimism that its business was turning around. The stock rose to $33.05 in after-hours trading after closing at $32.13, up 33 cents, during the regular session.
Analysts said the technology sector’s slightly better performance Monday had more to do with lower prices after heavy selling this year rather than any stronger prospects for the future. Nasdaq is down 10.1% so far this year, compared with a 0.7% gain in the Dow and a 4% loss in the S&P; during the same time.
In other market news:
* Oil-related stocks gained as crude prices rose $1.10 to $24.57 a barrel in New York trading on expectations that Venezuelan President Hugo Chavez’s return to power will prop up prices. Exxon Mobil advanced 30 cents to $41.60, and ChevronTexaco gained $1.20 to $85.30. Driller Baker Hughes rose $1.03 to $34.78.
* Airline stocks faltered after Continental Airlines reported a first-quarter loss and investors braced for red ink from other carriers. Continental fell $1.19 to $28.82, and the S&P; airlines index lost 3.9%.
Market Roundup, C8-9
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