- The Washington Times - Tuesday, January 27, 2004

NEW YORK (AP) — Investors intent on preserving profits looked past positive earnings reports yesterday and sent stocks sharply lower. Technology stocks saw steep declines on a disappointing outlook from chip maker Novellus Systems Inc.

After the previous session’s rally, when the Dow Jones Industrial Average reached its highest level in 31 months, not even solid results from five blue-chip companies could stop the declines. A consumer confidence reading that missed expectations and jitters about the Federal Reserve’s expected statement on interest rates today contributed to the decline.

Still, with results from most companies beating Wall Street’s forecasts, most traders and analysts remained optimistic about the long term.

“We’re still in a good environment; we’re still in an upward trend,” said Todd Leone, managing director of equity trading at SG Cowen Securities. “I like to see us go down a little bit, actually, it’s healthy. You don’t want to see the market going in a straight line up.”

The Dow closed down 92.59, or 0.9 percent, at 10,609.92.

The broader gauges also closed lower. The Nasdaq Composite Index closed down 37.79, or 1.8 percent, at 2,116.04. The Standard & Poor’s 500 Index closed down 11.32, or 1 percent, at 1,144.05.

Strong corporate earnings, encouraging economic data and an expression of confidence about the job market by Fed Chairman Alan Greenspan helped all the major indexes reach significant highs Monday.

While some investors were locking in gains yesterday, others were keeping a close eye on the Fed meeting. With a weak jobs picture and low inflation, most economists believe policy-makers will keep interest rates at their current low levels.

Separately, the Conference Board reported yesterday that its consumer confidence index rose in January to its highest level since mid-2002. The business group said the index rebounded to 96.8 following a dip in December to a revised reading of 91.7. Still, it missed the 99 reading forecast by analysts.

The economic data, along with an avalanche of earnings results coming in this week from more than 130 companies in the S&P; 500, is a lot for investors and financial professionals to digest, said Bill Meade, managing director for RBC Capital Markets. That can translate to volatility in the marketplace.

“The number of people that are actually focused on writing buy or sell tickets tends to be somewhat unpredictable and sporadic. … Things get a little crazy during reporting season,” Mr. Meade said. “But it’s evident to me that one day does not a trend make.”

On the Dow, chemical company DuPont closed down 50 cents at $42.58 despite beating analyst expectations and issuing an upbeat outlook for the year.

Caterpillar Inc. closed down $3.01 at $82 despite beating estimates with rising volume and prices in its machinery and engines segments and raising its sales forecast.

SBC Communications Inc. shed 74 cents to close at $25.95 after reporting a drop in profits on falling revenue and rising pension expenses. Results from the nation’s second-largest local phone provider matched expectations.

Among the Dow’s gainers, Merck & Co. closed up 16 cents at $47.36 after reporting lower profits and sales for the fourth quarter, partly because of restructuring costs and a new U.S. wholesaler distribution program. Merck’s results and outlook for the year matched analyst expectations.

And McDonald’s Corp. closed up 17 cents at $25.45 after posting a modest profit for the fourth quarter, in line with expectations. The fast-food retailer, in the midst of a restructuring, posted strong sales and operating results late Monday, showing no ill effects from the discovery of a case of mad cow disease in the United States.

Other advancers included Xerox Corp., which rose $1.20, or 8.6 percent, to close at $15.15, after strong sales of new products and cost cutting helped the copier and printer company beat expectations.

On the Nasdaq, Novellus Systems closed down $5.85, or 14.5 percent, at $34.40, after reporting profits that beat its own estimates and Wall Street’s expectations, but a weaker outlook for the year.

Decliners outnumbered advancers about 4 to 3 on the New York Stock Exchange. Volume was at 1.63 billion shares, compared with 1.45 billion shares traded on Monday.

The Russell 2000 index, which tracks smaller company stocks, was down 6.33, or 1 percent, at 595.17.

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide