Stocks Sag on War Worries, Downbeat Earnings Forecasts
Blue chips sagged to four-month lows while technology stocks ended flat Thursday, as nagging worries about the outlook for the economy, flagging corporate profits and the threat of war continued to weigh on investor sentiment.
Investors were still grappling with questions about a possible U.S. war with Iraq a day after Secretary of State Colin L. Powell made his case against Baghdad to the United Nations. War jitters have spurred a sharp sell-off in recent weeks that has erased the early-2003 rally.
The Dow Jones industrial average lost 55.88 points, or 0.7%, to 7,929.30, the third straight decline. The index had been off about 100 points a half hour before the close of trading.
The Dow’s finish was its lowest since Oct. 14, as it fell through the recent low of 7,945.13 set on Jan. 30.
The Standard & Poor’s 500 also fell to a four-month low, losing 5.44 points, or 0.6%, to 838.15.
Weak profit reports or forecasts from companies including Agilent Technologies, Adolph Coors and Sears Roebuck, and a surprisingly soft report on worker productivity, helped dampen the mood.
But major technology stocks held up relatively well. The Nasdaq composite index rose a fraction of a point to 1,301.73.
Even so, falling stocks outnumbered rising issues by 3 to 2 on Nasdaq and by nearly 2 to 1 on the New York Stock Exchange, in active trading.
The Labor Department reported before the opening bell that productivity reversed in the final quarter of last year, falling far short of forecasts. Growth in productivity, which measures the amount of goods and service produced for each hour of work, is cited as a key factor in an economic recovery.
“It’s more evidence the economy is having a continued sluggish recovery,” said Edgar Peters, investment chief at PanAgora Asset Management.
Wall Street is bracing for today’s report on January employment trends, as investors search for more clues to whether growth is regaining momentum.
Concerns are growing that an increasing number of firms delaying investment decisions amid the uncertainty of war could stifle a rebound in the economy and corporate earnings.
Profit fears were fanned as Agilent said it recorded a fifth straight quarterly loss and warned of a tough year. The stock dived $4.06 to $12.26.
Dell Computer slipped 15 cents to $24.02 after saying corporate spending on technology would be soft this year because of the weak economy and concerns about a potential war.
But among other tech giants, IBM added 40 cents to $77.51 and Sun Microsystems was up 17 cents to $3.24.
Among Thursday’s market highlights:
* Brewer Coors plunged $8.84 to $50.60 after reporting weak fourth-quarter earnings. Rival Anheuser-Busch lost 90 cents to $47.25.
* Sears tumbled $2.23 to $23.31 after warning of a first-quarter profit shortfall. Gap, however, rallied 55 cents to $15.53 after reporting that January sales at stores open at least a year rose 16% and forecasting quarterly earnings above expectations on good results from its holiday merchandise.
* Gas pipeline company El Paso slumped $1.16, or 19%, to $5.04, continuing its decline after saying Wednesday it will slash its dividend 82% to conserve cash.
Also, South Dakota utility NorthWestern sank 95 cents to $3.95 after saying its board deferred a decision on the firm’s dividend.
* In commodities trading, oil gained 23 cents to $34.16 a barrel in New York trading.
Market Roundup, C6-7
