Stocks Retreat on Worries About War, Earnings
Stocks fell Tuesday for the fourth straight session as a warning from President Bush and the U.S. troop buildup against Iraq rattled investors already worried over the corporate outlook at the height of earnings reporting season.
“We are sitting and waiting,” said Arnie Owen, managing director of capital markets at Roth Capital Partners. “The market is dealing with the uncertainty of whether or not we are going to war, and there are more corporate earnings coming out this week.”
Oil prices’ hitting new two-year highs also weighed on investors. The February futures contract for crude oil -- which expired Tuesday -- surged 70 cents to $34.61 a barrel on war worries and concerns that the continuing strike in Venezuela will crimp U.S. supplies.
The Dow Jones industrial average dropped 143.84 points, or 1.7%, to 8,442.90. The Standard & Poor’s 500 index sagged 14.16 points, or 1.6%, to 887.62. The tech-laden Nasdaq composite index fell 11.94 points, or 0.9%, to 1,364.25. All three slumped for the fourth session in a row.
Losers beat winners by more than 2 to 1 on the New York Stock Exchange and by about 5 to 3 on Nasdaq. Trading was moderate.
A surge in housing starts in December fueled a rally shortly after the opening bell, but that enthusiasm quickly faded under a cloud of war worries.
Bush said it was clear Saddam Hussein was not disarming and warned: “Time is running out.” The Pentagon ordered two more aircraft carriers and an additional 37,000 troops to the Gulf region.
“The war fears are still there, and they are not going away,” said David Memmott, head of listed block trading at Morgan Stanley. “People are obviously still hoping for a peaceful settlement, and right now it doesn’t look like that is going to happen.”
Quarterly earnings poured in from marquee names such as Citigroup, 3M and Johnson & Johnson on Tuesday; about half of the S&P; 500 companies are slated to post their results in the next two weeks.
Hopes that earnings are poised for a rebound had spurred an early January rally, but tepid outlooks from corporate giants such as Microsoft last week have reined in that optimism.
Tuesday’s flood of earnings did little to clear the murky corporate profit picture.
Dow component Citigroup said profit fell by a third, hit by a large stock research scandal settlement, potential loan losses and litigation related to energy trader Enron Corp. The world’s No. 1 financial services company said it would deliver double-digit income growth this year, but shares fell 66 cents to $36.14.
Retail and entertainment company stocks fell for a second day after the University of Michigan’s January consumer confidence index, released Friday, unexpectedly dropped. Wal-Mart Stores lost 96 cents to $49.01, and AOL Time Warner fell 46 cents to $14.35.
Alcoa weighed on the Dow with a drop of $1.01 to $21.14, sinking in sympathy with Canadian aluminum maker Alcan, which posted a profit that came in at the lower end of estimates. Alcan fell $1.60 to $30.03.
Diversified manufacturer 3M, whose products include Scotch tape and sandpaper, posted better earnings and said its first-quarter results would beat expectations. The Dow member wobbled nearly unchanged before ending 68 cents lower at $125.64.
Health-care company Johnson & Johnson, another Dow stock, said its profit rose, boosted by robust sales of medical devices for the heart and prescription drugs for arthritis and schizophrenia. Its shares edged down 80 cents to $53.99.
Concerns about questionable accounting also resurfaced after U.S. securities regulators said late Friday that they had intensified separate probes of Electronic Data Systems and Interpublic Group. EDS sank $1.87 to $16.95, and Interpublic fell 77 cents to $13.41.
One bright spot was Juniper Networks, after UBS Warburg raised its rating for the No. 2 network equipment maker. Juniper rose 47 cents to $8.97.
