Stocks fall in cautious trading
By Amy Baldwin AP Business Writer
NEW YORK (AP) – Investors grew more cautious Thursday, sending stock prices moderately lower despite better-than-expected profits from Sears and United Technologies.
The declines, which erased an early advance, signaled that investors were pacing themselves and waiting for more earnings results before making any major commitments to stocks. Analysts said investors were also mindful of the ongoing possibility of war with Iraq.
“We have a lot more to go. There is a lot more of the (earnings) reporting season ahead of us. The market is just going to crank its way through the next three or four weeks,” said Tony Cecin, director of institutional trading at US Bancorp Piper Jaffray in Minneapolis.
After gaining as much as 82.34 earlier, the Dow Jones industrial average closed down 24.27, or 0.3 percent, 8,698.91, according to preliminary calculations. On Wednesday, the Dow dropped 119.44 on a mixed earnings report from Intel and a reduced outlook from DuPont.
The market’s broader gauges also retreated. The Nasdaq composite index fell 14.43, or 1 percent, to 1,424.37. The Standard & Poor’s 500 index declined 3.53, or 0.4 percent, to 914.69.
Analysts said investors were also worried about the possibility of war with Iraq following news Thursday that United Nations inspectors found 11 empty chemical warheads at an ammunition storage area.
While investors were circumspect, analysts said there are reasons for them to be encouraged about the market.
“You are seeing signs of positive momentum in the marketplace,” Cecin said. “You are seeing more companies report better numbers even if they continue to be cautious in the near term. Inflation is nonexistent. I see good footing for the market in “03. … I think it will be a good market, not a great market.”
Among Thursday’s losers, Microsoft declined 81 cents to $55.46 ahead of its fiscal second-quarter earnings report due out after the close of regular trading. IBM fell $1.54 to $86.05 ahead of its fourth-quarter results also due out later.
Analysts attributed the weakness of Microsoft and IBM, both Dow components, and of the market in general to recent earnings news that confounded investors.
“The earnings have been kind of mixed. Like Intel’s earnings were good, but they said their capital spending would be down. So that put a drag on the market,” said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee.
After the market closed Tuesday, Dow industrial Intel reported better-than-expected earnings but also said it was reducing capital spending this year by roughly $1 billion. The chip maker traded lower Thursday, down 15 cents at $17.20, adding to Wednesday’s 44-cent loss.
News was also mixed on Yahoo!, which late Wednesday posted quarterly earnings of 8 cents a share, surpassing analysts’ forecast for a 6-cent profit and beating last year’s 2-cent loss. But Thursday, Credit Suisse First Boston downgraded Yahoo on concerns the stock was overvalued and the Internet company fell 83 cents to $18.75.
But some earnings results helped stave off larger declines. Sears climbed $1.88 to $28.58 after posting fourth-quarter profits that beat analysts’ expectations by 20 cents a share.
United Technologies, another Dow stock, soared $1.81 to $66.21 on earnings that exceeded Wall Street’s estimates by 2 cents a share.
The market was also able to fend off bigger losses due to some positive economic news. The Labor Department reported that consumer inflation inched up by a mere 0.1 percent in December as the tepid economy held prices in line and created a positive environment for shoppers. Low inflation is one of the few benefits to consumers in a troubled economy.
Separately, the department said new claims for unemployment benefits fell last week by a seasonally adjusted 32,000 to 360,000, the lowest level since Nov. 30. Analysts were expecting a rise in claims. It was the second straight week that claims dropped.
Advancing issues still managed to claim a narrow lead over decliners on the New York Stock Exchange where volume was light.
The Russell 2000 index, which tracks smaller company stocks, fell 0.64, or 0.2 percent, to 394.89.
Overseas, Japan’s Nikkei stock average finished Thursday essentially flat, off just 0.03 percent. In Europe, France’s CAC-40 rose 0.3 percent, Britain’s FTSE 100 slipped 0.2 percent, and Germany’s DAX index gained 0.2 percent.
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