Glum Jobless News Halts Stock Rally
Stocks slipped Thursday as lackluster employment news dampened spirits on Wall Street after a two-day rally.
Sentiment had improved in recent sessions as many companies matched or topped earnings expectations for the first quarter, but after three years of a bear market, investors remain wary about prospects for the U.S. economy and corporate profits, analysts said.
Cautious profit outlooks from manufacturer Sara Lee and insurer American International Group added to the air of uncertainty.
“Some of the earnings numbers were not as exciting as some of the others we’ve seen,” Rick Meckler, president of LibertyView Capital Management, told Reuters. “It reminded people that the market’s probably ahead of earnings right now.”
The Dow Jones industrial average fell 75.62 points, or 0.9%, to 8,440.04 after hitting its highest close since mid-March on Wednesday. The broader Standard & Poor’s 500 index fell 7.59 points, or 0.8%, to 911.43, after finishing Wednesday at its highest level since mid-January.
The tech-heavy Nasdaq composite index, which ended the prior session at its highest point in nearly five months, dropped 8.93 points, or 0.6%, to 1,457.23.
Trading was heavy, with losers outnumbering winners by about 3 to 2 on Nasdaq and the New York Stock Exchange.
Lingering questions about the state of the economy kept Wall Street on guard as weekly jobless claims jumped more than expected to a seasonally adjusted 455,000.
Investors shrugged off a surprisingly strong 2% rise in March durable-goods orders, focusing instead on the troublesome employment picture.
The employment report hurt the dollar and pushed down yields on Treasury securities. The yield on the benchmark 10-year T-note slid to 3.92%, from Wednesday’s close of 3.98%. In currency trading, the dollar weakened against the Japanese yen and the euro.
Growing anxiety about the deadly SARS virus also gave investors an excuse to lock in profits after the market’s recent run, traders said. Severe acute respiratory syndrome has killed more than 260 people and infected about 4,400 worldwide.
Sara Lee, the maker of Jimmy Dean sausage, Hanes underwear and other products, lost $1.94 to $17.80 after it forecast lower earnings in the current quarter.
AIG dropped $2.90 to $55.37 after saying first-quarter net profit fell, and the company said SARS could slow sales in Asia.
In other highlights:
* Blue-chip names on the move also included SBC Communications, which climbed 72 cents to $22.52; Walt Disney, off 59 cents to $18.65; and Alcoa, down 70 cents to $22.01.
* Genzyme General jumped $3 to $39.38 after the Food and Drug Administration said Genzyme’s drug Fabrazyme won U.S. approval to treat the rare genetic disorder Fabry disease.
* Internet advertising provider Overture Services sank $4.99 to $11.49 a day after posting lower quarterly earnings and warning that full-year results would miss Wall Street forecasts.
* Veritas Software rallied $1.87 to $21.15, although the company said its quarterly profit fell from a year ago as customers delayed technology spending.
* Business software maker Citrix Systems rose $2.73 to $18.16 after saying Wednesday that its quarterly profit sailed past analysts’ estimates amid strong demand for its software.
* FuelCell Energy surged 69 cents to $6.16 after the Department of Energy chose the firm to participate in a $139-million development project.
* In foreign trading, indexes lost 2.8% in Germany, 2% in France and 1.7% in Britain.
Market Roundup, C6-7
