Investors’ Profit Taking Pulls Stocks Lower
Wall Street couldn’t muster a follow-up Wednesday to the previous day’s big rally as mixed earnings reports from Intel, Philip Morris, Boeing and other blue chips left investors uninspired.
The selling, coming a day after a 207-point gain in the Dow Jones industrials and a 63-point surge in the Nasdaq composite index, was the latest example of the market’s inability to hold on to gains. Instead of buying on expectations of stronger profits ahead, investors pulled back and took profits.
“The market is recognizing that it may take a couple of quarters for earnings to really change,” said Michael Strauss, managing director and senior economist at Commonfund. “Although we’re having a lot of day-to-day volatility, on the longer scope the market is really establishing a more sideways trading pattern as this all sorts out.”
The Dow fell 80.54 points, or 0.8%, to 10,220.78. The tech-heavy Nasdaq slipped 6.12 points, or 0.3%, to 1,810.67, while the Standard & Poor’s 500 index fell 2.30 points, or 0.2%, to 1,126.07.
Overall, the market was narrowly mixed, with winners edging losers by 17 to 15 on the New York Stock Exchange and decliners outnumbering advancers by 19 to 17 on Nasdaq in active trading.
Wall Street started the session focused on Federal Reserve Chairman Alan Greenspan’s testimony before Congress. Although the chairman said the outlook for U.S. economy was improving and that the Fed had no immediate plans to hike interest rates, his comments had little effect on stocks.
Wall Street focused instead on a mixed bag of earnings reports.
Intel shares rose $1.13 to $30.64 on earnings released Tuesday that met expectations despite disappointing revenue. The market was pleased by stronger-than-expected microprocessor sales, although the chip maker said it sees no evidence yet of a broad economic recovery.
The gains were enough to spur more buying in semiconductor stocks, some of which had turned in better-than-expected results. Texas Instruments, which beat forecasts Monday, rose 26 cents to $34.05, while Motorola, which also came in ahead of Wall Street estimates, jumped $1.33 to $16.33.
Blue chips were mixed. Boeing dropped $3.33 to $45.37 after missing profit estimates due to weakness in its commercial satellite operation and continuing fallout from the terrorist attacks.
Ford rose 32 cents to $16.18 on a narrower-than-expected loss and indications the auto maker expects a strong year. Philip Morris slid 29 cents to $53.07 despite the tobacco maker beating earnings estimates by a penny.
In other market news:
* After the closing bell, Dow heavyweight IBM reported its sharpest drop in earnings since it emerged in 1993 from a string of losses. But the computer maker said it would meet Wall Street’s full-year profit forecasts. After falling $1.39 to $84.81 during the regular session, Big Blue rose to $86.48 in after-hours trading.
* Oil stocks rose along with crude prices, which added $1.19 to $25.94 a barrel on news of declines in U.S. crude stockpiles. The Philadelphia oil services index rose 3% amid gains by such firms as Schlumberger, up $1.14 to $56.04. Independent producer Apache added $1.45 to $56.70.
* Also posting solid gains were shares of gold mining companies, rising in sympathy with a surprising rebound in bullion, which rose $3.30 to $302.10 an ounce. The S&P; index of mining stocks rose 4.3% as sector leader Newmont Mining gained 88 cents to $29.07.
* The Bloomberg index of real estate investment trusts fell for a third day, losing 1.4%. Among the losers: Prentiss Properties, down 91 cents to $31.05, and Equity Office Properties, down 54 cents to $30.07.
Market Roundup, C7-8
*
(BEGIN TEXT OF INFOBOX)
Daily Diary
(text of infobox not included)
