- The Washington Times - Wednesday, January 19, 2005

NEW YORK (AP) — Stocks sank yesterday as strong economic numbers were eclipsed by mixed corporate results, including disappointing earnings from JPMorgan Chase & Co.

Overall, profits have come in somewhat better than expected, but rising worries about slowing corporate growth have muted the market’s reaction even to good news. The prospect of higher interest rates is another looming concern. And although economic numbers have been solid, inflation rising during 2004 at the fastest pace in four years exacerbated those concerns.

“So far, the season is not all that negative. I think what’s happening is … the market is suffering from the fears of a possible hawkish Federal Reserve going forward,” said Peter Cardillo, chief strategist at S.W. Bach & Co., who noted several other worries, including lofty oil prices ahead of what could be problematic elections in Iraq on Jan. 30. “There are several fear factors overshadowing the earnings season.”

The Dow Jones Industrial Average fell 88.82, or 0.84 percent, to 10,539.97. The broader gauges also fell. The Standard & Poor’s 500 index slipped 11.35, or 0.95 percent, to 1,184.63. The Nasdaq Composite Index lost 32.45, or 1.54 percent, to 2,073.59.

For most investors, the focus was on earnings, which were just not good enough to inspire buyers. One of the biggest letdowns came from JPMorgan Chase, which missed estimates, causing the entire banking sector to sag.

“I think generally people were expecting that we’d have decent numbers from JPMorgan,” said Som Dasgupta, managing director of trading at PNC Bank in Pittsburgh. “Nobody was expecting their profits to fall.”

JPMorgan Chase shed 56 cents to $37.84 after saying its profits had fallen 11 percent in the fourth quarter. The bank blamed some of the shortfall on costs associated with the merger with Bank One Corp., which was completed in July.

Pfizer Inc., the world’s largest drug company, declined 42 cents to $24.88 after reporting that its net income more than quadrupled during the fourth quarter, driven by strong sales of cholesterol drug Lipitor. Earnings still missed analysts’ forecasts after charges.

IBM Corp., which announced profits that beat expectations after the close Tuesday, fell $1.80 to $93.10.

Revenue also topped forecasts, as IBM posted strong overseas sales on the back of a weak dollar. IBM’s outlook for the year was positive, but company officials said retirement expenses would be higher than expected because of the currency effect.

On the Nasdaq Stock Market, Yahoo Inc. fell 73 cents to $36.45 after the company nearly tripled its fourth-quarter profits with brisk online advertising. Both earnings and revenue topped Wall Street expectations, and executives raised the company’s outlook for the year.

Decliners outnumbered advancing issues by more than 3 to 2 on the New York Stock Exchange. Preliminary consolidated volume came to 1.91 billion shares, compared with 2.03 billion traded Tuesday.

The Russell 2000 Index, which tracks smaller-company stocks, was down 6.96, or 1.11 percent, at 617.91.

Overseas, Japan’s Nikkei stock average shed 0.16 percent. In Europe, France’s CAC-40 lost 0.16 percent, Britain’s FTSE 100 fell 0.12 percent, and Germany’s DAX index was down 0.12 percent.

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