Stocks extend declines, tech sector suffers from Intel’s bearish comments
By Amy Baldwin AP Business Writer
NEW YORK (AP) – Stocks fell modestly Wednesday after bearish comments from Intel and a profit warning from Pier One Imports offset strong earnings from CVS and ConocoPhillips. But many investors simply sat out the session, waiting for gross domestic product and employment data due out later this week.
“The stock market, having rallied from March 11 to June is range-bound, waiting for something to turn it on,” said Larry Wachtel, market analyst at Prudential Securities. “The only thing that can turn the market on is if some of these numbers come in better than expected.”
And, while second-quarter earnings reports have mostly managed to beat Wall Street’s expectations, stocks again pulled back in response to companies muted outlooks for the future.
“The market has been looking at earnings news, which has continued to be constructive but muted in terms of guidance going forward. That raises questions like: Did we go too far, too fast?” from the March lows, said Jack Caffrey, equities strategist at J.P. Morgan Private Bank.
The Dow Jones industrial average closed down 4.41, or 0.1 percent, at 9,200.05, according to preliminary calculations. The Dow forfeited 80.11 in the previous two sessions.
The broader market also finished slightly lower. The Nasdaq composite index fell 9.42, or 0.5 percent, to 1,721.95. The Standard & Poor’s 500 index declined 1.63, or 0.2 percent, to 987.65.
“It is not really shocking that there is some pause,” said Caffrey, referring to the strides the market has made from this year’s lows, which were made in March. The Nasdaq has surged about 36 percent, while the Dow and S&P have each risen about 22 percent.
Analysts said investors were putting off any big moves ahead of major economic reports due out later this week – the Commerce Department’s report on gross domestic product on Thursday and the Labor Department’s employment report and the Institute for Supply Management’s monthly report on manufacturing on Friday.
The market was still smarting from Tuesday’s report from the Conference Board, showing an unexpected and steep drop in consumer confidence.
Intel fell 41 cents to $24.49. The chipmaker’s chief executive Craig Barrett said corporate information technology spending in established economies remains, according to Dow Jones Newswires.
Profit warnings also weighed on Wall Street. Pier One Imports dropped $1.85 to $18.10 after cutting its fiscal second-quarter earnings estimate.
Genesis Microchip slid $2.75 to $11 after it also reduced its fiscal second-quarter outlook. Additionally, the company was downgraded by Pacific Growth Equities to “equal-weight” from “overweight.”
Airline stocks fell after President Bush said in a wide-ranging news conference that the nation’s airlines face “real threat” of more terrorist attacks. AMR, the parent of American Airlines declined 81 cents to $9.05.
Among the market’s gainers, drug store company CVS climbed $1.20 to $28.95 after posting second-quarter profits that beat Wall Street’s estimates by a penny a share.
ConocoPhillips inched up 5 cents to $52 on quarterly earnings that topped analysts’ expectations by 15 cents a share.
Declining issues outnumbered advancers about 5 to 4 on the New York Stock Exchange. Trading volume was light.
The Russell 2000 index, the barometer of smaller company stocks, fell 0.80, or 0.2 percent, to 472.80.
Overseas, Japan’s Nikkei stock average finished Wednesday down 2.1. In Europe, France’s CAC-40 rose 1 percent, Britain’s FTSE 100 gained 0.1 percent and Germany’s DAX index inched up 0.03 percent.
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