Poor earnings report hurt stocks


Associated Press

NEW YORK – Bad earnings news plagued Wall Street again today after Goldman Sachs lowered its profit forecast for Microsoft and two other high-tech firms became the latest companies to warn of disappointing results.

Investors, unsure of where to put their money amid the volatility, repeated what has become a pattern: They sold off technology and boosted pharmaceutical, utility and other stocks considered less risky.

“The market is still coming to grips with the fact the economy is slowing down as are profit expectations, especially in the tech sector,” said Ronald J. Hill, an investment strategist with Brown Brothers Harriman &Co. “People are being very defensive about where they put their money.”

The Nasdaq composite index closed down 43.85 at 2,752.65, according to preliminary calculations.

Blue chips also fell. The Dow Jones industrial average tumbled 45.89 to 10,618.49, pulled lower by tech components including Microsoft. The broader Standard &Poor’s 500 index slipped 7.54 to 1,343.92.

“I think the market can look forward and expect that the Fed will be lowering interest rates in the first quarter, and earnings will come back on track,” said Steven Goldman, a market strategist at Weeden &Co, referring to Federal Reserve Chairman Alan Greenspan’s comments earlier this week suggesting such a move might be possible. “But until then, it’s not going to be pretty.”

Microsoft fell $3.81 to $52.88, extending a loss of $3.19 from the previous session, after Goldman Sachs predicted soft personal computer sales would hurt the software maker’s business.

Investors also punished shares of Motorola, which slipped 44 cents to $17.44, and Scient, down $1.66 at $2.84, after both companies warned of soft profits.

And Web portal Yahoo! fell $3.44 to $34.06 after investment firm WR Hambrecht cut the stock to “neutral” from “buy,” citing weakness in the online advertising market.

It was the second straight session of declines – the latest selloff in a trend dating back to Labor Day – caused by concerns that the moderating economy would hurt corporate profits.

The uncertainty has been exacerbated in recent weeks by a string of earnings warnings from companies including Ford, Office Depot and Gateway. The rally set off by Greenspan’s comments Tuesday, for example, was halted the next day by warnings from Apple Computer and Bank of America.

Investors, unsure of how the moderating economy will affect corporate profits, have been rotating their money between technology and non-technology stocks, trying to preserve their profits.

That translated into a boost for pharmaceutical and consumer products stocks, which tend to perform well in less robust economic conditions. Avon Products rose $1.50 to $40.25 after the cosmetics company said it would meet quarterly estimates. Merck was up $1.50 at $91.06.

Utility stocks also had the market’s support. Exelon rose $3.78 to $67; Duke Energy was up 25 cents at $86.63.

Declining issues led advancers 12 to 11 on the New York Stock Exchange. Volume came to 1.11 billion shares, compared with 1.36 billion shares at the same point Wednesday.

The Russell 2000 index fell 2.44 to 461.10.

Overseas, Japan’s Nikkei stock average fell 1.4 percent. Germany’s DAX index was down 0.88 percent, Britain’s FT-SE 100 was off 0.67 percent, and France’s CAC-40 was unchanged.

Copyright ©2000 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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