Stocks Hit by Jobless Claims, Profit Warnings
Stocks sank Thursday as uncertainty over war, a jump in unemployment claims and a string of corporate profit warnings knocked the blue-chip Dow to a closing low not seen since early October.
“Until you get a good percentage of the uncertainty [about war] out of the way, then this market is just going to continue to trend lower,” said John O’Donoghue, co-head of listed trading at Credit Suisse First Boston.
The Dow Jones industrial average shed 101.61 points, or 1.3%, to 7,673.99, near its low for the session. The Standard & Poor’s 500 index dropped 7.75 points, or 0.9%, to 822.10. The tech-dominated Nasdaq composite index declined 11.51 points, or 0.9%, to 1,302.89.
Losers beat winners by 3 to 2 on the New York Stock Exchange and Nasdaq in lackluster trading. Only three stocks in the 30-member Dow closed higher as the gauge fell nearer to its multiyear closing low of 7,286.27 reached Oct. 9. The Dow now is down almost 8% year to date.
President Bush had a news conference scheduled for Thursday night to discuss what the White House called the importance of disarming Iraq in the face of staunch opposition from France, Russia and Germany.
“The fact that you don’t know what Bush is going to say ... is adding to nervousness,” said Michael O’Hare, head of block trading at Lehman Bros. in New York. “And fear creates uneasiness and selling.”
Higher-than-expected weekly jobless-benefit claims reignited worries that the economy may continue to slow, although news that factory orders grew by a surprising 2.1% in January cushioned the blow a bit.
Profit warnings from Raytheon, Schering-Plough and meat processor Tyson Foods also damped the market’s mood.
Tyson Foods cut its profit outlook for its fiscal second quarter ending March 29 and its fiscal year, citing a product glut and the weak economy. The stock lost 83 cents to $7.70.
Schering-Plough fell after the drug maker cut its 2003 profit view by 25%. The stock, the most active on the New York Stock Exchange, sank to a six-year low of $15.65 before rebounding to close at $16.45, off 15 cents.
Defense contractor Raytheon warned that higher pension costs probably would cause 2004 earnings to miss Wall Street forecasts. Its shares lost $1.49 to $25.42.
The market briefly rose in early-morning trading on rumors that Bush would announce the capture of Al Qaeda leader Osama bin Laden. Government officials denied the rumors.
But it was the prospect of a U.S. war with Iraq that continued to preoccupy investors most, traders said.
“People do not want [the United States] to have to go it alone, and that hurts the market,” said Anthony Iuliano, trader for Glenmede Trust Co.
Geopolitical concerns boosted gold, which gained $3.70 to $356.80 an ounce in New York trading. Near-term oil futures also rose, adding 31 cents to $37 on the New York Mercantile Exchange.
In other highlights:
* Altria Group, parent of tobacco company Philip Morris, led the decline in the Dow, slumping $1.71 to $37.28. Investors are concerned that the company will lose an Illinois lawsuit in which it is accused of lying to smokers about the health risks of “light” cigarettes, said Tim Drake, an analyst for Banc One Investment Advisors. A judge probably will rule next week in the case, Merrill Lynch & Co. analyst Martin Feldman said.
* The semiconductor sector was in focus as investors awaited a mid-quarter update, scheduled for after the close, from Intel, the world’s largest chip maker. Intel shares closed down 28 cents to $16.70. In after-hours trading, Intel fell to $15.96 after the company tightened its revenue forecast for the current quarter.
* Soggy February retail sales also briefly sparked concerns that consumer spending -- a linchpin of U.S. growth -- may be buckling. Shares of electronics retailers Best Buy and Circuit City Stores rose after they posted lower quarterly sales but lifted their fourth-quarter earnings outlooks. Best Buy rose 86 cents to $27.52, while Circuit City gained 5 cents to $4.38.
Market Roundup, C6-7
