Stocks Lower on Continued Profit Woes
Stocks dipped after a wobbly session Tuesday as disappointing outlooks from chip maker RF Micro Devices and other companies offset investors’ hopes for a quick end to the war in Iraq.
“When the war is out of the way, the focus will shift to the weak economy and weaker-than-expected earnings,” said Keith Keenan, vice president of institutional trading at brokerage Wall Street Access.
The tech-laden Nasdaq composite index slipped 6.57 points, or 0.5%, to 1,382.94. The Dow Jones industrial average lost 1.49 points, or less than 0.1%, to 8,298.92. The Standard & Poor’s 500 index edged down 1.64 points, or 0.2%, to 878.29.
Losers edged winners by about 9 to 7 on the New York Stock Exchange and Nasdaq in light to moderate trading.
Traders said stocks got a brief boost early as rumors floated of reports that Iraq’s President Saddam Hussein was dead. The market fell again after three Arabic television networks rejected suggestions they were reporting Hussein had been killed in U.S. military strikes.
In the technology sector, semiconductor shares lost ground after profit warnings from RF Micro and another chip maker, Microchip Technology.
RF Micro sank 72 cents, or 12%, to $5.33 after saying demand for its more profitable products was weaker in the fourth quarter. The wireless chip maker, which ranked among Nasdaq’s most active, has warned its loss would be wider than expected even as it raised its outlook for quarterly sales.
Microchip Technology tumbled $1.87 to $18.66. After Monday’s close, the company warned for the second time in three weeks that fourth-quarter results would fall short of expectations, blaming a drop in sales on the war in Iraq and the spread of the deadly SARS illness.
Chip equipment stocks also slumped. Applied Materials fell 47 cents to $13.41 and KLA Tencor fell $1.03 to $37.46. The SOX index of chip stocks fell 3.7%.
“The market’s still focused on developments in the Mideast, but as we go into corporate earnings season, I think there’s going to be a shift toward fundamentals and the numbers companies are reporting,” said Robert Mikkelsen, managing director at the Advest Group Inc.
Concerns about a weak economy were reflected in the bond market, where the yield on the benchmark 10-year Treasury note fell to 3.93% from Monday’s close of 3.98%.
Traders also were worried by reports that OPEC wants to cut production quotas to prop up oil prices, tempering hopes that crude prices, which jumped in the weeks leading up to the U.S. assault on Iraq, will fall much further. Near-term oil futures inched up 4 cents to $28 a barrel in New York trading.
In other highlights:
* Altria Group was the biggest gainer in the Dow, rising 98 cents to $30 and climbing as high as $30.94 earlier. A court temporarily blocked a $3-billion punitive damages award against cigarette maker Philip Morris USA, an Altria unit.
* Fitness equipment maker Nautilus Group skidded $3.71, or 25%, to $11.19 after a bleak profit outlook.
* Accredo Health plunged $11.11, or 44%, to $14.29 after the distributor of drugs for chronic diseases cut its 2003 forecast and said it may have to take a charge to adjust the purchase price of an acquisition. Earlier, Accredo sank as low as $12.60.
* Dreyer’s Grand Ice Cream dropped $2.76 to $65.32 after further worries that U.S. regulators would block the company’s proposed merger with Nestle. Nestle’s U.S.-traded shares rose 65 cents to $50.20.
* Varian Medical Systems rose $4.87 to $52.37. The maker of cancer therapy systems said it expected fiscal second-quarter earnings to exceed its previous estimates.
* Acxiom fell $3.45, or 21%, to $13.05. The company said quarterly sales and earnings would fall short of the computer-based marketing firm’s expectations, blaming war in Iraq and the U.S. economy for a sharp drop-off in data sales.
Market Roundup, C6-7
