Stocks End 4-Day Rally; Intel, Iraq Drag Markets
Wall Street made an expected retreat Wednesday on discouraging earnings from Intel and profit taking from a four-day rally that had boosted the Dow Jones industrial average nearly 1,000 points.
The Dow fell almost 220 points, its losses widening after President Bush signed a congressional resolution that would allow him to use force if necessary against Iraq.
The possibility of war further weighed on a market that already had been expected to pull back after its recent rally. Still, some analysts are hoping that overall third-quarter earnings will surpass forecasts, and that could put the market in position to continue its advance.
The Dow closed down 219.65 points, or 2.7%, at 8,036.03; on Tuesday, the Dow had soared 378 points, bringing its gain over four trading sessions to 969 points. The Nasdaq composite index sank 50.02 points, or 3.9%, to 1,232.42. The Standard & Poor’s 500 index fell 21.25 points, or 2.4%, to 860.02.
Losers swamped winners by 3 to 1 on the New York Stock Exchange and by 3 to 2 on Nasdaq in active trading.
Bond yields continued their recent climb, with the yield on the benchmark 10-year Treasury note rising from Tuesday’s close of 3.99% to 4.05% -- its first close above 4% in more than a month.
In other highlights:
* Intel dropped $2.98 to $13.54. The No. 1 chip maker announced late Tuesday that earnings missed analysts’ expectations by 2 cents a share, setting the stage for Wednesday’s sell-off.
* Coca-Cola, another Dow stock, dropped $5.28 to $47.20. The world’s biggest soft-drink company earned 47 cents a share in the third quarter, below analysts estimates. Full-year profit may miss analysts’ forecasts, the company said.
* Capital One Financial lost $6.79, or 20%, to $27.85. The fifth-biggest issuer of Visa and MasterCard credit cards said it expects to write off more loans in the fourth quarter of this year and first half of next year. Other credit card issuers also slid. Providian Financial dropped 80 cents, or 18%, to $3.70, and MBNA lost $1.52 to $18.29.
* Other companies saw their shares fall Wednesday despite posting positive earnings results. Brokerage firm Merrill Lynch, which beat estimates by 15 cents a share, slipped 9 cents to $35.90.
* Investors took profits from companies responsible for Tuesday’s rally. General Motors tumbled $2.56 to $34.14, Johnson & Johnson fell 66 cents to $58.90, and Citigroup declined 29 cents to $33.85. All three beat earnings expectations in reports Tuesday.
