Stocks Dip; Microsoft Drops After Hours
Thu Apr 18, 5:52 PM ET
By Denise Duclaux
NEW YORK (Reuters) - Stocks dipped on Thursday as investors shook off a nervous midday drop on news of a plane crashing into a Milan skyscraper, but could not get over a weak financial forecast from technology bellwether Nokia (news - web sites) Corp. .
Microsoft Corp. offered more grim news after the closing bell. The software giant posted quarterly earnings at the low end of analysts' estimates. The Dow component and Nasdaq heavyweight, which lost 26 cents to $56.37 in the regular session, fell another $3.32 in after-hours trade and helped spur a 2 percent drop in the Nasdaq-100 indicator.
"Microsoft has been a master in the past in beating expectations, and we are in a new world of transparency where it's more difficult for companies to manage their earnings," said John Davidson, president and chief executive at PartnerRe Asset Management, which oversees more than $4 billion. "The earnings will have a negative impact on the market -- at least at the open" on Friday.
Microsoft's weak performance comes after the market pared steep losses during the regular session when Italian officials called the crash of a small tourist plane into Milan's tallest building an apparent accident. Reports of the crash, which at first appeared similar to the suicide attacks that leveled the World Trade Center on Sept. 11, had sparked a midday sell-off.
"It was eerie for people to see another news report very similar to what happened here," said Rick Meckler, president of LibertyView Capital Management, located in New Jersey across the Hudson River from the former World Trade Center. "It was a little bit too close in terms of news."
The Dow Jones industrial average <.DJI> ended off 15.50 points, or 0.15 percent, at 10,205.28, according to the latest data, after sinking more than 1.6 percent just minutes after the plane crash. Hamburger giant McDonald's Corp. and computer maker International Business Machines Corp. helped support the blue-chip gauge with upbeat forecasts.
The technology-stuffed Nasdaq Composite Index <.IXIC> shed 8.24 points, or 0.46 percent, to 1,802.43, after tumbling almost 1.8 percent. The broad Standard & Poor's 500 <.SPX> was down 1.60 points, or 0.14 percent, at 1,124.47.
Hotel and airline stocks initially fell, but bounced off lows as officials apparently ruled out terrorism as the cause of the crash. Wireless and chip equipment stocks pressured the market after mobile phone maker Nokia and semiconductor equipment maker KLA-Tencor Corp. offered weak outlooks at the height of the first-quarter reporting season.
"There are a lot of questions in the market out there," said Ned Collins, head of trading at Daiwa Securities America. "Give me a compelling reason why I should I be in the market right now. People are just very confused."
Declining stocks matched the number of advancing stocks on the New York Stock Exchange (news - web sites), and winners managed to beat out losers by a ratio of 9 to 8 on Nasdaq. More than 1.36 billion shares changed hands on the Big Board, and more than 1.85 billion on Nasdaq.
The S&P airline index <.GSPAIR> was down 2.55 percent, after diving more than 5 percent immediately after the Milan news. The Sept. 11 attacks, in which hijacked commercial airliners were used, had sent prices of major U.S. airline stocks down by half or more as travelers canceled vacations and stuck close to home.
Jitters fed by the plane crash in Italy hit the owners of the two largest U.S. airlines, AMR Corp. and UAL Corp. , which each had two planes commandeered in the Sept. 11 attacks. AMR, parent of American Airlines, fell 85 cents to $22.80, and United Airlines parent UAL dropped 56 cents to $14.84.
Finland's Nokia, the No. 1 cellphone maker, fell $2.53 to $18.10 and ranked as the most active stock on the New York Stock Exchange. The company fell victim to weak demand for cellphones amid slower global economies, and cut its sales growth forecast for the year. The sales warning overshadowed better-than-expected first-quarter profits.
Chip equipment stocks also ranked among the worst-performing sectors in the S&P 500. The S&P semiconductor equipment index <.GSPTKSM> sank 3.07 percent.
KLA-Tencor, the No. 3 maker of equipment used in the production of microchips, lost $3.05 to $65.61. The company disappointed investors with a weaker-than-expected forecast for orders, the same day it reported sharply lower quarterly revenue and profit.
Advanced Micro Devices Inc. , Intel Corp.'s chief rival in the market for microprocessors, tumbled $2.22 to $12.60. The chipmaker, which posted a loss and a decline in revenue, said second-quarter revenue would fall 5 percent to 10 percent, in line with seasonal patterns. Intel, the world's largest maker of computer chips, fell 19 cents to $30.45.
But IBM sounded a brighter note and jumped $4.45, or more than 5 percent, to $88.95, supporting the Dow. The world's largest computer maker said it is on track to meet analysts' forecasts for its 2002 earnings and revenues.
McDonald's rose $1.46, or more than 5 percent, to $28.62, also lifting the Dow. The world's largest restaurant operator said it expects higher sales in the United States and Europe this year.
Merck & Co. rose $1.52 to $56.57, and Schering-Plough Corp. jumped $1.28 to $30.54. The drug heavyweights posted only modest financial improvement during the first quarter. But the companies, which have disappointed investors in recent quarters, included no unexpected bombshells this time around.
Honeywell International Inc. lost $2.16, or more than 5 percent, to $38.30. The Dow component posted a jump in first-quarter profit thanks to cost cuts and a one-time gain, but its stock dropped on lingering worry about the commercial air sector and asbestos liabilities.
This week and next are the busiest periods for reporting first-quarter profits. More than one-half of the Dow companies report this week, and more than 60 S&P 500 companies will issue quarterly results.
Resistance -- the point where sellers are likely to emerge -- is at 10,325 for the Dow, 1,863 for Nasdaq and 1,135 for the S&P 500. Support -- where buyers are expected to swoop in -- is at 10,150 for the Dow, 1,770 for the Nasdaq and 1,120 for S&P. |
