Stocks fluctuate amid anxiety over profits
Wall Street’s growing angst about company earnings gave stocks a mixed finish Tuesday, with the Dow Jones industrials suffering their fifth straight loss. Broader market indicators closed modestly higher.
Amid prevalent concern that the recession’s effect on profits will be more severe than many have anticipated, investors shied away from placing big bets after aluminum giant Alcoa reported late Monday that it lost $1.19 billion in the fourth quarter.
An analyst’s warning about profits at General Electric only added to the market’s uneasiness.
Questions about earnings -- past and future -- are likely to dominate trading in the coming weeks.
Computer chip maker Intel and drug company Genentech are among the companies reporting results this week.
The market also will get an earlier-than-expected reading on the financial sector when JPMorgan Chase reports earnings Thursday, nearly a week ahead of schedule. Investors are fearful of yet another year of multibillion-dollar losses among financial companies struggling with mounting problems in credit card and commercial real estate portfolios.
Meanwhile, after the close of trading, Citigroup and Morgan Stanley announced a deal to combine their brokerage operations. The deal gives Citigroup $2.7 billion in badly needed cash.
“We’re sort of in a wait-and-see mode,” said Carl Beck, partner at Harris Financial Group. “The optimism that we saw at the beginning of the year has sort of been put on hold as people await earnings reports over the next couple of weeks.”
A day after the major stock indexes gave up more than 2% on concerns about profits, the Dow Jones industrials fell 25.41 points, or 0.3%, on Tuesday to 8,448.56. Both Alcoa and GE weighed on the blue chips.
The Standard & Poor’s 500 index rose 1.53 points, or 0.2%, to 871.79, while the Nasdaq composite index rose 7.67 points, or 0.5%, to 1,546.46.
The Russell 2,000 index of smaller companies climbed 1.1%.
Rising stocks outnumbered losers by about 8 to 7 on the New York Stock Exchange.
The Treasury debt market was mixed. The yield on the benchmark 10-year Treasury note fell to 2.3% from 2.31% late Monday.
The dollar was mixed against other major currencies, while gold prices edged down.
Oil futures rose 19 cents to settle at $37.78 on the New York Mercantile Exchange after tumbling 8% on Monday.
As worries about corporate earnings weighed on stocks, Alcoa fell 5.1% further. GE lost 5.6% after an analyst raised concerns about the strength of the conglomerate’s fourth-quarter results and its attempts to maintain its top credit rating.
The market got some upbeat news that lent support to stocks early in the day before they turned down. The Commerce Department said the U.S. trade deficit narrowed to its smallest size in five years as oil consumption dropped by a record amount.
Although demand for imports has dropped, investors are more concerned by the waning need for American products overseas as economies around the world suffer. The fear is that as companies struggle with falling global demand, it will be more difficult for the economy to rebound.
In other market highlights:
* Asian stock markets tumbled, hurt by reports that Sony would post this spring its first yearly operating loss in 14 years on declining sales for digital cameras, flat-panel TVs and other gadgets. Key stock indexes fell 4.8% in Japan and 2.2% in Hong Kong.
* In Europe, share prices slumped 0.6% in Britain, 1.8% in Germany and 1.5% in France.
