Stocks Slide on Disappointing Earnings News
Wall Street resumed its new year’s slide Tuesday amid a batch of disappointing corporate earnings reports.
After regular trading ended, however, semiconductor leader Intel provided some relief with a relatively upbeat business outlook.
The stock market fell into the red at the start of trading and stayed there the rest of the day.
The Dow Jones industrial average ended with a loss of 64.81 points, or 0.6%, at 10,556.22, its fifth decline in seven sessions.
The broader Standard & Poor’s 500 index gave up 7.26 points, or 0.6%, to 1,182.99, and the technology-heavy Nasdaq composite fell 17.42 points, or 0.8%, to 2,079.62.
Falling stocks outnumbered winners by 7 to 4 on the New York Stock Exchange and by 2 to 1 on Nasdaq.
The earnings season “started with a thud,” Joseph Quinlan, chief market strategist for Banc of America Capital Management in New York, told Bloomberg News.
After regular trading ended Monday, aluminum giant Alcoa reported lower fourth-quarter earnings because of costs related to business divestitures. But even excluding those costs, the company’s earnings from continuing operations were unchanged from a year ago, at 39 cents a share, despite a 12% jump in sales.
Alcoa, the first member of the Dow index to report fourth-quarter results, slid 82 cents to $29.65, its lowest closing level since August.
The report hurt other metal producers on concerns that their earnings may fall short despite soaring metal prices.
Chip maker Advanced Micro Devices also depressed Wall Street’s mood Tuesday, after the company late Monday said fourth-quarter sales missed analysts’ forecasts.
The company’s shares plunged $5.27, or 26%, to $14.86, the lowest since October.
In the biotech sector, Genentech fell $3.73 to $50.70 after the company late Monday reported quarterly profit that was below analysts’ expectations.
“There’s a sense that nobody wants to buy right now,” said Michael Murphy, head trader at Wachovia Securities in Baltimore. With the bulk of earnings reports looming, “I think people are just waiting to see how things shape up,” he said.
Some investors were cheered by Intel’s profit report after regular trading ended. The company’s per-share profit was unchanged from a year earlier, at 33 cents, but a sharp drop in chip inventories raised optimism about results in 2005.
Intel shares, which slipped 34 cents to $22.54 in regular trading, rose to $23.23 in after-hours activity.
So far this year the Dow is down 2.1%, the S&P; 500 is off 2.4% and Nasdaq has lost 4.4%.
Profit taking has been more pronounced in some of the sectors that were the biggest winners in 2004. The Russell 2,000 index of smaller stocks has slumped 6.2% this year. A Bloomberg News index of real estate investment trust shares has fallen 6.9%.
In other trading Tuesday, long-term Treasury bonds may have attracted some of the money exiting the stock market. The yield on the 10-year T-note eased to 4.24% from 4.27% on Monday.
Among the day’s market highlights:
* Chip stocks sliding after the Advanced Micro Devices warning included National Semiconductor, off 59 cents to $16.39; International Rectifier, down 99 cents to $37.48; Rambus, down 76 cents to $20.75; and Broadcom, off 32 cents to $32.52.
But QLogic jumped $2.66 to $36.41. The Aliso Viejo-based chip company said its results in the recent quarter would be above previous estimates.
* Metal-industry stocks falling with Alcoa included Inco, down 50 cents to $34.51; Phelps Dodge, down $1.54 to $95.71; U.S. Steel, down $2.65 to $46.34; and Nucor, off $1.56 to $48.36.
* Investors continued to take profits in many Internet-related issues, including EBay, which fell $2.47 to $104.84; InfoSpace, which lost $2.23 to $38.96; and Shopping.com, which slid $2.58 to $22.22.
* California Pizza Kitchen added 18 cents to $23.73. The Westchester-based restaurant chain said it expected fourth-quarter earnings of 32 cents a share, up from a previous forecast of 30 cents.
* Rockwell Automation also bucked the market downtrend. Shares of the industrial systems maker surged $5.59 to a record $51.85 after the company sharply boosted its fourth-quarter earnings forecast and also lifted its outlook for 2005.
