Stocks Slammed on Earnings Forecasts
Stocks staged another broad retreat Thursday, pushing major market indexes to their lowest levels of the new year, as EBay’s growth forecast raised concerns about the trend in corporate earnings.
Shares of the Internet auction giant plummeted $19.72, or 19%, to $83.33, helping to drag the Nasdaq composite index down 27.71 points, or 1.3%, to 2,045.88 -- its lowest close since Nov. 10.
The Dow Jones industrial average slid 68.50 points, or 0.7%, to 10,471.47, and the Standard & Poor’s 500 index dropped 9.22 points, or 0.8%, to 1,175.41.
Losers topped winners by 2 to 1 on the New York Stock Exchange and on Nasdaq.
Once again, the market focused on negatives rather than on positives. Stocks slid even as the dollar continued to strengthen, oil prices fell and Treasury bond yields remained subdued.
Also, reports of merger talks between retailing giants Federated Department Stores and May Department Stores failed to stoke gains among most other retailers.
The market appeared to be fixated on earnings reports and 2005 forecasts.
“There are quite a lot of companies that are reporting earnings that are a little light,” Douglas Ober, who manages the $1.3-billion Adams Express fund in Baltimore, told Bloomberg News. “People say, ‘Oh well, it looks like things are slowing down a bit.’ In the short term, it’s liable to cause some disappointment and some selling.”
Indeed, stocks that were slammed on earnings reports or forecasts Thursday included Qualcomm, down $3.29 to $37.78; AT&T;, down 44 cents to $18.07; Sony, down $1.69 to $37.11; slot machine maker International Game Technology, off $3.50 to $30.05; and credit card company Capital One, which lost $3.44 to $78.66.
Some analysts also were troubled by a Federal Reserve report showing weaker-than-expected mid-Atlantic region manufacturing activity this month.
Overall, most companies reporting fourth-quarter results so far have beaten analysts’ estimates, as is typical. But EBay’s lowered growth forecast for 2005 may have struck a nerve with investors who are concerned that corporate profits may slow more than expected.
In the face of other uncertainties -- the upcoming Iraqi elections, a meeting of the Organization of the Petroleum Exporting Countries on Jan. 30 and a Federal Reserve meeting Feb. 1-2 -- the stock market is vulnerable to further losses, some said.
“I think you’ve got all these things that have snowballed and are prompting people to pull chips off the table,” said Scott Wren, equity strategist for A.G. Edwards & Sons.
Stocks are headed for their third straight losing week. The Dow is down 2.9% this year, the S&P; 500 is off 3% and Nasdaq has fallen 6%.
If the Dow loses 19 more points, it will wipe out its gain for all of 2004.
In other trading Thursday, near-term oil futures fell 64 cents to $46.91 a barrel, continuing to retreat after a government report Wednesday showed rising U.S. inventories.
The dollar rallied on, pushing the euro down to a two-month low of $1.297 from $1.299 on Wednesday.
The yield on the benchmark 10-year Treasury note slipped to 4.16% from 4.17%.
Among the day’s highlights:
* Internet-related shares falling with EBay included Provide Commerce, down $4.29 to $31.65; Amazon.com, down $1.60 to $42.36; and Google, down $3.38 to $193.92.
* In the retail sector, May shot up $2.88 to $34.25 while Federated lost $1.77 to $55.31. Among other retail giants, Kohl’s fell 53 cents to $46.98, Dillard’s slid $1.79 to $25.75 and Nordstrom edged up 1 cent to $48.12.
* General Motors lost 46 cents to $36.25, a 52-week low, after the company said Wednesday that quarterly profit fell 37%.
