The broad media smells it now, after the gains are really erased.
CBS MarketWatch
Gains slip away as earnings worries return
Wednesday April 9, 12:06 pm ET
By Susan Lerner
NEW YORK (CBS.MW) -- Early gains melted away Wednesday as worries about the outlook for the economy and corporate profits reclaimed Wall Street's attention after pictures of Iraqis cheering U.S. Marines in Baghdad's central square provided an early lift for stocks.
"I expect the enthusiasm (over war events) could continue for a while but at some point we will come back to reality and the enthusiasm will have to mesh with the corporate picture and sort out how earnings are shaking out and I don't think anybody expects corporate earnings to do terribly well here this quarter," said Andy Brooks, vice president and head stock trader at T. Rowe Price.
At last check, the Dow Jones Industrials (CBOT:^DJI - News) were off 13 points, or 0.2 percent, to 8,285, the Nasdaq Composite Index (NasdaqSC:^IXIC - News) shed 11 points, or 0.8 percent to 1,372 and the S&P 500 (CBOE:^SPX - News) lost 2.4 points, or 0.3 percent, to 876.
With Saddam Hussein's whereabouts unknown, U.S. Marines helped Iraqis in downtown Baghdad destroy a concrete symbol of the regime: a giant statue of the ruler that stood over the capital's central square. Other units seized the strategic Rasheed Airport in the capital city while fighting continued in other areas of the city, notably near the main university campus. See full report on the war.
Altria (NYSE:MO - News) , Alcoa (NYSE:AA - News) , Honeywell (NYSE:HON - News) , Boeing (NYSE:BA - News) and United Technologies (NYSE:UTX - News) were among the Dow's best performers. McDonald's (NYSE:MCD - News) , Microsoft (NasdaqNM:MSFT - News) , AT&T (NYSE:T - News) , Home Depot (NYSE:HD - News) and Hewlett-Packard (NYSE:HPQ - News) , and General Electric were the biggest losers among the blue chips.
In what was tracking to be another day of light volume, advancers led decliners 1,767 to 1,251 on the New York Stock Exchange and 1,422 to 1,318 on the Nasdaq. Mid-day volume came in at about 550 million shares on the Big Board and 600 million shares on the Nasdaq.
Earnings watch
Wall Street is paying closer attention to the state of post war economy and the quality of corporate earnings, especially following the recent spate of profit warnings. Six S&P 500 companies scheduled to report Wednesday.
Edward Kerschner, investment strategist at UBS Warburg told clients Wednesday he expects first quarter earnings for the S&P 500 should be in line or above his $11.55 a share estimate, but said his full-year forecast of $50 a share is at risk unless the U.S. economy "rebounds fairly soon and accelerates in the second half of 2003."
For the first quarter, Kerschner said the sectors where negative earnings surprises seem most likely are commodity producers, transportation, machinery, hotels and media. In line or positive surprises are most likely in the energy, homebuilding, housing finance, financial, consumer non-durables and healthcare sectors.
Mixed results
Wednesday's news on the earnings front was mixed.
Abbott Laboratories (NYSE:ABT - News) posted first quarter net earnings of $801 million, or 51 cents a share, in line with the average analyst estimate compiled by Thomson First Call. Looking ahead, the drug maker expects to earn 51 to 53 cents a share in the second quarter and $2.20 to $2.25 for the year, versus analyst expectations of 53 cents and $2.21, respectively. Abbott shares added 77 cents to $40.70.
Homebuilder M.D.C. Holdings (NYSE:MDC - News) reported first-quarter net income of $37 million, or $1.36 a share, above the average analyst estimate compiled by Multex of $1.31 a share. Revenue increased 25 percent to $570 million, versus analyst expectations of $540.5 million. MDC climbed $1.21 to $42.95.
German automaker DaimlerChrysler (NYSE:DCX - News) said it was sticking to its target for 2003 to increase operating profits, excluding one-time effects but that it has become "much more difficult to reach the targets we have set ourselves." Jürgen E. Schrempp, chairman of the board of management said the first quarter of 2003 was "encouraging" and that the carmaker' Mercedes Car Group "had a good start to the year 2003." DaimlerChrysler shares moved up 1.7 percent to $32.95.
But Dun & Bradstreet (NYSE:DNB - News) warned it'll fall short of current profit projections on lower first-quarter revenue of $315 million, below the estimate of $330.9 million in a survey of analysts by Thomson First Call. It expects EPS of 51 cents, excluding non-core net charges of 3 cents per share vs. the forecast of 53 cents per share. DNB shares tumbled nearly 13 percent to $34.48.
And Stanley Works was down more than 9 percent to $21.65 after the tool maker said first-quarter and full year results would fall short of expectations and announced plans to lay off roughly 1,000 employees as part of a restructuring initiative designed to improve margins.
After Tuesday's closing bell, Knight Ridder (NYSE:KRI - News) said it expects first-quarter net income to be "slightly" better than last year's first quarter total of 60 cents a share. Analysts polled by Thomson First Call had been anticipating a profit of 67 cents. The company said ad sales have been negatively impacted by the U.S. war in Iraq. Knight Ridder shares fell 31 cents to $60.05.
Still ahead
Ahead of its quarterly report due after the closing bell, Yahoo fell 0.9 percent to $23.59 Wednesday. The First Call consensus estimate calls for the Internet services provider (NasdaqNM:YHOO - News) to report earnings of 6 cents a share for the first quarter.
Genentech is also slated to report after the close. The No. 2 biotech firm (NYSE:DNA - News) is expected to earn 28 cents per share, according to the average estimate of analysts polled by Multex. Genentech shares gained 1.3 percent cent to $37.21 ahead of the report
Focus on Microsoft
Microsoft was on the mind of analysts Wednesday but their outlooks for the software giant conflicted.
Analyst Drew Brosseau at SG Cowen upgraded the stock to "outperform" from "market perform" ahead of an upcoming new product cycle that will kick off on Apr. 24.
Although he doesn't expect the product rollouts to drive "material" changes to his 2003 to 2004 estimates, he thinks they could bolster investor perceptions about Microsoft's growth prospects and competitive position, as well as strengthen the potential for some modest upside to expectations.
But analyst Rick Sherlund at Goldman Sachs said he expects Microsoft's management to be "cautious" about its outlook for fiscal 2004, given that the results will be "much more dependent on the underlying pace of PC demand."
Meanwhile, SoundView Technology said it expects the company to post quarterly results in line with forecasts but the firm remains concerned about growth catalysts for 2003 and 2004 but that it is unlikely Microsoft will outperform the broader technology market.
Microsoft shares slid 1.1 percent to $25.29.
Sell-side action
In other analyst action, Motorola was downgraded at Needham & Co. on questions about the strength of the company's handset business given a recent warning from communications chipmaker RF Micro Devices and an excess supply of handsets in China.
Motorola shares (NYSE:MOT - News) fell 2.9 percent to $8.08.
Meanwhile, AT&T fell to a level not seen since the mid-1980s after CS First Boston lowered its 2003 earnings and revenue estimates for Ma Bell to $1.53 a share and $34.6 billion, respectively, from $1.77 and $35.1 billion and also cut its price target on the stock to $18 from $27. AT&T shares recently changed hands at $14.86, down 25 cents. |
