US stocks fall on bleak earnings, S&P in bear territory
(Updates to close)
By Haitham Haddadin
NEW YORK, April 24 (Reuters) - Stocks fell on Tuesday,
pushing the Standard & Poor's 500 index <.SPX> back into bear
market territory, as investors offloaded shares following bleak
earnings from computer giant Compaq Computer Corp. and
others.
The selling intensified late in the day and erased an early
rally spurred by investors' snatching up beaten-down stocks in
the hope the U.S. economy will pick up after a series of
interest-rate cuts by the Federal Reserve.
Stocks rallied this month on mounting hopes the market,
which has been badly beaten over the last year, already
reflects slower corporate earnings growth. But a tumble in a
key barometer of consumer confidence and a procession of dour
earnings from high-tech bellwethers kept optimism in check on
Tuesday.
"All the statistics that come out are a bit of a
double-edged sword," said Richard Babson, president of
Babson-United Investment Advisors Inc, which manages $1.8
billion. "If consumer confidence is down, then may be the Fed
will cut rates more at the May meeting, but if the Fed is
cutting more it's because earnings look bleak and there is
continued deterioration in corporate balance sheets."
The tech-laden Nasdaq Composite Index <.IXIC> fell 42.71
points, or 2.07 percent, to 2,016.61 after rising almost 2
percent. JDS Uniphase Corp. , down 13.8
percent, was among the most heavily traded stock on the Nasdaq
after the fiber optics parts maker reported disappointing
financial results.
The blue chip Dow Jones industrial average <.DJI> lost
77.89 points, or 0.74 percent, at 10,454.34.
The S&P 500 shed 14.89 points, or 1.22 percent, at
1,209.47. That put the the broad market gauge back in bear
market territory as defined by a drop of 20 percent or more
from a peak. The index exited bear market territory last week
when the Fed surprised markets with a fourthrate cut this
year.
"What we are seeing, and will continue to see, is some of
this 'push me, pull you' in the market," Babson said.
Compaq fell more than 15 percent, or $3.15 to $17.50, on
the New York Stock Exchange. The computer giant late Monday
posted lower profits as it battled soft sales and price cuts by
rivals such as Dell Computer Corp. .
The S&P computer hardware gauge <.SPCOMP> eased 4 percent,
reflecting losses in Compaq, Dell, down $3.50 at $25.85 on
Nasdaq, and other computer makers.
A key gauge in consumer confidence fell sharply in April
because of deteriorating business conditions and fears about
job security, the Conference Board's Consumer Confidence Index
showed. The broad gauge of consumer attitudes fell to 109.2
from a downwardly revised March reading of 116.9, its sixth
tumble in seven months. Consensus forecasts were for a fall to
112.0.
"Consumer confidence was weaker than expected," said Barry
Berman, managing director of equity trading at Robert W. Baird
& Co. "But it may give the Fed more reason to cut rates at the
next (policy-setting) meeting."
Investors have been scouring corporate earnings for any
hint the economy is turning around, but lackluster earnings
continued to rain down on Wall Street.
JDS Uniphase fell $3.34 at $20.84 after it posted a $1.3
billion loss, and said it would slash 5,000 jobs, or 20 percent
of its work force, to cut costs in the slowing economy.
Check Point Software Technologies Ltd. reported
earnings that beat expectations but saw its shares fall more
than 14 percent amid investor worries about sluggish technology
spending. Check Point closed down $10.38 at $62.01.
Intel Corp. shed $1.18 at $29.14. Intel agreed to
buy three privately held companies that make components for
optical networking equipment as the No.1 chipmaker continues
its push into new markets beyond its bread-and-butter
microprocessor business.
The Philadelphia semiconductor index <.SOXX> lost 2.47
percent amid losses by other sectoral firms including Applied
Materials . Orders for gear from North American-based
chip-equipment companies fell 23 percent in March from the
previous month amid a continued slump in the semiconductor
industry, a trade group said late on Monday.
Telephone and cable television giant AT&T Corp. nosed
up 14 cents to $22.12, although the Dow component posted a loss
on stiff competition and weak prices, and warned its
second-quarter earnings will be below current expectations.
Another Dow company, DuPont Co. , the No. 1 U.S.
chemical company, said earnings dropped sharply because of a
slowing economy, high raw material costs, and poor results from
its drugs unit. Its shares however rose 67 cents at $44.80.
Struggling telecommunications equipment giant Lucent
Technologies Inc. jumped $1.05 to $10.25. The company
said its results dropped due to a slowdown in customer spending
and the company's restructuring. Brokerage Salomon Smith
Barney, however, raised its investment rating on the company.
(Wall Street Desk,212-859-1881, haitham.haddadin@reuters.com)
REUTERS
Rtr 16:46 04-24-01 |
