Dow Skid Persists on Rate Concerns
Stocks skidded in light volume Monday, knocking the blue-chip Dow to its fourth-straight loss as the threat of struggling corporate profits and rising interest rates blurred the brightening economic picture.
“A lot of the positives of the recovery have apparently already been factored into the market,” said Peter Coolidge, senior equity trader at Brean Murray & Co. “The market is looking ahead to interest rate hikes and how that will affect business going forward.”
Growing hopes that the U.S. economy is emerging from its year-long slump helped bolster stocks earlier this month. But investors now are worried about first-quarter corporate earnings. “Confession” season, when companies warn that profits could land short of analysts’ estimates, heats up this week.
Signs of a firming economy have triggered concerns over higher borrowing costs. The Federal Reserve last week abandoned its 15-month-old warning of economic weakness and set the groundwork for possible interest rate hikes this year.
The market finished near its session lows as selling accelerated in the final hour of trading. The Dow Jones industrial average sank 146 points, or 1.4%, to 10,281.67, suffering its longest losing streak in six weeks. Only two Dow members--Coca-Cola, up 50 cents to $51.75, and SBC Communications, up 8cents to $38--eked out gains.
The Nasdaq composite index fell 38.90 points, or 2.1%, to 1,812.49. The Standard & Poor’s 500 index dropped 16.83 points, or 1.5%, to 1,131.87.
The market lost a bit of steam after a report showed that sales of existing homes fell 2.8% in February but still posted their second-best annual rate, according to a national real estate trade association.
Investors will have many economic reports to sort through this week, including data on U.S. durable goods, a report on consumer confidence and the government’s final revision to fourth-quarter gross domestic product data.
Losers led winners by 2 to 1 on the New York Stock Exchange and by 3 to 2 on Nasdaq, but trading volume slowed sharply. Market activity is expected to remain relatively quiet this week with trading floors thinly staffed ahead of the Easter and Passover holidays. Financial markets will be closed Friday for Good Friday.
Among the day’s highlights:
* EMC, the world’s largest maker of data storage systems, fell 56 cents to $11.04. Salomon Smith Barney said the company could miss first-quarter revenue estimates. Storage networking company Brocade Communications Systems fell $1.51 to $24.50.
* Philip Morris fell $1.53 to $51.96, pressuring the Dow. An Oregon jury ordered the tobacco giant to pay $150 million to the estate of a woman who died of lung cancer. It was the latest in a series of large jury awards against tobacco firms and the first award involving low-tar brands. RJ Reynolds Tobacco lost $1.54 to $64.40.
* Gold shares climbed, propelling many to fresh 52-week highs. Newmont Mining gained 78 cents to $27.15 and Goldcorp rose 96 cents to $17.96. Gold futures prices are up 7% this year.
* Airline stocks fell after America West Airlines cut fares as much as 70%. Delta Air Lines slumped $2.15 to $30.99; AMR, parent of American Airlines, fell $1.39 to $25.15; and America West Holdings slipped 26 cents to $5.21.
* Countrywide Credit rose 67 cents to $43.95 on a Barron’s magazine report that the Calabasas-based mortgage lender may be a good acquisition candidate for a major bank.
Market Roundup, C8-9
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