- The Washington Times - Wednesday, January 22, 2003

NEW YORK (AP) Wall Street looked askance at earnings reports yesterday, with investors bidding stocks sharply lower despite healthy profits at such companies as 3M and Ford. The Dow Jones Industrial Average slid more than 143 points, giving the blue chips a drop of nearly 400 points over four straight losing sessions.
Analysts said a spate of disappointing corporate outlooks in the past week and fears of war with Iraq made investors skeptical of better-than-expected earnings.
"The reference that the economy might not have had a demonstrable turn yet is really setting people off," said Ned Riley, chief investment strategist at State Street Global Advisors.
Concerns about war increased after news that a gunman in Kuwait opened fire on a sport utility vehicle carrying American civilians, killing one and wounding another. The U.S. Embassy characterized it as a terrorist act.
"Despite the [earnings] data and we have had some favorable data this market is still focused on talk of war, the probability of war and the effects of war. And much of that was exacerbated by the fatal shooting in Kuwait," said Alan Ackerman, executive vice president at Fahnestock & Co.
The Dow closed down 143.50, or 1.7 percent, at 8,442.90. The Dow, down for four straight days, added to the 2.3 percent loss of the past week, which came amid cautious outlooks from companies, including Intel and IBM. With two other triple-digit declines, the Dow has dropped 399.72, or 4.5 percent, since Wednesday.
The broader market also retreated for the fourth day in a row. The Nasdaq Composite Index fell 11.94, or 0.9 percent, to 1,364.25, after a weekly decline of 4.9 percent. The Standard & Poor's 500 index fell 14.16, or 1.6 percent, to 887.62, having dropped 2.8 percent last week. The market was closed Monday for the Martin Luther King holiday.
Investors were feeling anxious about fourth-quarter results and corporate outlooks in what is likely to be the busiest week in the earnings-reporting season.
Among losers yesterday, Merrill Lynch fell $1.15 to $40.08, J.P. Morgan Chase declined 77 cents to $25.42, and Hewlett-Packard fell 30 cents to $18.93, all ahead of earnings reports due out today.
Companies that exceeded expectations last week but issued cautious forecasts also traded lower yesterday. IBM fell 76 cents to $80.54 and Intel declined 5 cents to $16.29, having said last week that it was reducing capital spending by roughly $1 billion this year.
"The good news is companies are beating expectations. But the bad news is the next six months are going to be a difficult task and they see no change in that," Mr. Riley said.
Keeping meager corporate outlooks in mind, investors sold Ford 2 cents lower to $10.14, although the company posted earnings yesterday that surpassed analysts' expectations by a penny a share and Chief Executive Officer Bill Ford reiterated that he expects the company to report full-year earnings of 70 cents a share, well ahead of most Wall Street forecasts.
And 3M declined 68 cents to $125.64 despite also exceeding earnings expectations by a penny a share.
The market's losses also came despite better-than-expected news on housing activity. The Commerce Department reported that construction of homes rose 5 percent in December, surprising analysts who anticipated no change.


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