Stocks fall on weak earnings from Micron Tech
By Hope Yen AP Business Writer
NEW YORK (AP) – Disappointing earnings from Micron Technology prompted a sell-off on Wall Street Wednesday, as investors unloaded stocks on renewed anxiety about the strength of corporate profits.
Analysts said investors were remaining cautious about committing to the market, particularly after an eight-week blue-chip rally in the autumn that some believe came too fast. Light trading volume also contributed to exaggerated price swings.
“With the lack of a real catalyst, it doesn’t take much news positive or negative to move the market,” said Mike Kayes, chief investment officer at Eastover Capital in Charlotte, N.C. “It’s going to be in that type of volatile trading range for a while.”
The Dow Jones industrial average dropped 88.04, or 1 percent, to close at 8,447.35, according to preliminary calculations. It fell 92 points on Tuesday.
The broader market also fell. The Nasdaq composite index declined 30.55, or 2.2 percent, to 1,361.50. The Standard & Poor’s 500 index lost 11.87, or 1.3 percent, to 891.12.
Chip maker Micron Technology fell $3.06, or 23 percent, to $10.22 after reporting a first-quarter loss that was worse than Wall Street expected. The news dragged down other tech stocks, including Intel, which dropped 76 cents to $17.13.
Concerns about a war with Iraq also weighed on the market. White House spokesman Ari Fleischer said Wednesday there were serious omissions and problems with Iraq’s weapons declaration as President Bush pondered the United States’ next move.
Stock trading has been choppy in recent days as investors struggle to decide whether to buy on bets of stronger prospects for 2003 or continue to cash in profits from the market’s autumn rally.
Still, some analysts believe investors remain largely upbeat and should push stocks higher by month’s end on hopes of a year-end rally. December is historically the strongest time of year for stocks, with much of its gains seen in the last two weeks.
“It would be nice and unexpected, but I wouldn’t bank on it,” Kayes said, referring to a holiday rally. Still, he added, “if the market continues to sell off, we may get a rally in January instead.”
Brian Bruce, director of global investments at PanAgora Asset Management, said trading during the rest of this week may offer the best indication of the market’s future direction since volume tends to drop off significantly around Christmas.
“My personal thought is that you’re going to have a little end-of-year enthusiasm,” he added. “But it’s totally dependent on retailers getting their sales.”
Investors largely shrugged off an encouraging economic report Wednesday. The Commerce Department reported that the U.S. trade deficit declined to $35.1 billion in October, the best showing in seven months.
Several bearish corporate outlooks hurt stocks.
Blockbuster slid $6.27, or 32.3 percent, to $13.13 after the video store chain lowered its fourth-quarter and year estimates, citing a slowdown in rentals during the holiday season.
Bank of New York declined $4.11, or 15.5 percent, to $22.39 after saying it would take a fourth-quarter charge of $240 million, due largely to its exposure to United Airlines, which filed for bankruptcy protection.
General Electric, meanwhile, dropped 34 cents to $25.66 after the diversified company said it was buying Finnish medical instrument maker Instrumentarium Corp. for $2.05 billion in cash. Instrumentarium rose $11.61, or 41.7 percent, to $39.45.
And Oracle fell 40 cents to $10.62 ahead of its quarterly earnings report, which was due out after the close of markets Wednesday.
Declining issues outnumbered advancers about 5 to 2 on the New York Stock Exchange. Volume was light.
The Russell 2000 index, a barometer of smaller company stocks, fell 7.32, or 1.9 percent, to 383.93.
Overseas, Japan’s Nikkei stock average finished 2 percent lower Wednesday. In Europe, France’s CAC-40 lost 2 percent, Britain’s FTSE 100 declined 1.9 percent and Germany’s DAX index fell 3.7 percent.
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