Stocks tumble again on earnings worries

By LISA SINGHANIA

Associated Press

NEW YORK — Stocks fell sharply Tuesday as investors girded themselves for third-quarter earnings reports amid renewed concerns that the moderating economy and higher oil prices will hurt corporate profits.

The downgrades of two chip makers early in the day sent technology issues tumbling, as investors sold off shares of stocks they feared especially vulnerable.

It wasn’t clear if better-than-expected results from Yahoo! would be enough to head off a further decline Wednesday. Adding to the pressure was Lucent Technologies, which warned of disappointing fourth-quarter results.

The tech-heavy Nasdaq composite index closed down 115.02 at 3,240.54. The Standard and Poor’s 500 index dropped 15.01 to 1,387.02.

The Dow Jones industrial average fell 44.03 to 10,524.40.

"The investor or trader needs to be very cognizant that we are in a very unsteady, very fragile market and I don’t think we’re going to turn around for any sustainable rally until we get out of this earnings season," said Ricky Harrington, a technical analyst at Wachovia Securities in Charlotte, N.C.

Stock indicators have been heading lower since the beginning of September on worries that the moderating economy would affect third-quarter results. A string of warnings from industry leaders such as Dell, Intel and Apple Computer have only strengthened those concerns.

Technology issues led the market lower after analysts at Salomon Smith Barney and Lehman Brothers downgraded chip makers Xilinx and Altera, citing weak market conditions. Xilinx fell $16.69 to $62.44, Altera tumbled $11.06 to $21.81.

The selloff quickly spread to other high-tech issues. Intel fell $1.50 to $37.56. IBM dropped $3.06 to $114.88. Both companies are Dow components.

Brokerage stocks also fell on persistent speculation that some of the firms have too many high-risk investments. Morgan Stanley Dean Witter was especially hard hit, dropping $8.75 to $74.50. Discount brokers fared better, lifted by the news that Deutsche Bank wanted to buyout the portion of National Discount Brokers it doesn’t already own.

But the focus of the day again was on earnings. Investors continued to punish the stocks of companies with disappointing results, while rewarding those with healthy profits.

Yahoo!, which reported earnings slightly above Wall Street estimates after the market closed, initially surged, then fell another $4 in after-hours trading after ending the regular session down $3.06 at $82.69.

Motorola’s earnings per share, were in line with Wall Street estimates, but sales were somewhat weaker. It fell $1.50 in after-hours trading, after ending the regular session down 38 cents at $26.63.

Lucent, which warned after the market closed, fell $7.06, nearly 23 percent, to $24.25 in after-hours trading, extending the $1 drop in regular trading. The market sent shares of PacifiCare Health Systems down 35 percent to $21.02 in after-hours trading after it issued a similar warning.

The repeated selloffs in the market since September reflect investors’ growing concerns about the health of the overall market, said Hugh Johnson, chief investment officer at First Albany Corp. He pointed to strength in stocks like Johnson &amp Johnson, which rose $3.31 to $94.63, as evidence of the market’s defensive posture. Utilities like PECO Energy, which climbed $2.25 to $58.81, were also higher.

"When you’re worried that the economy and earnings are slowing, you buy drugs and utilities," Johnson said. "Drugs were the top-performing group in the market today and electric utilities were number five."

Rising oil prices, up to $33.18 per barrel of sweet crude Tuesday on the New York Mercantile Exchange, haven’t helped ease those worries, although they did help boost some energy-related stocks.

Exxon Mobil rose $2.19 to $93.31. Baker Hughes was up $1.19 at $36.13.

Declining issues outnumbered advancers by a 14 to 9 ratio on the New York Stock Exchange. Consolidated volume came to 1.24 billion shares, well ahead of the 860.89 million in the previous session.

The Russell 2000 index was down 7.90 at 481.63.

Overseas, Japan’s Nikkei stock average fell 1.04 percent. Germany’s DAX index was off 0.11 percent, Britain’s FT-SE 100 slipped 0.27 percent, and France’s CAC-40 was up 0.54 percent.

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

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Local News

Kim Skarda points at her home on a map on Thursday, June 20, 2024 in Concrete, Washington. A community called Sauk River Estates has a very steep slope above it. There is a DNR-approved timber sale that boarders the estate properties, yet they were not consulted about the sale before approval. The community has already appealed the sale and has hired their own geologist to conduct a slope stability report at the site. (Annie Barker / The Herald)
Beneath steep slope, Concrete neighbors fear landslides from logging above

Nielsen Brothers plans to cut 54 acres of timber directly behind the community of 83 homes. Locals said they were never consulted.

Law enforcement respond to a person hit by a train near the Port of Everett Mount Baker Terminal on Thursday, June 27, 2024 in Mukilteo, Washington. (Annie Barker / The Herald)
2 killed in waterfront train crashes were near Mukilteo ‘quiet zone’

In June, two people were hit by trains on separate days near Mukilteo Boulevard. “These situations are incredibly tragic,” Everett’s mayor said.

Rob Plotnikoff takes a measurement as a part of the county's State of Our Waters survey at Tambark Creek in Bothell, Washington on Monday, July 1, 2024. (Annie Barker / The Herald)
Snohomish County stream team bushwhacks a path to healthier waterways

This summer, the crew of three will survey 40 sites for the State of Our Waters program. It’s science in locals’ backyards.

Logo for news use featuring the municipality of Mountlake Terrace in Snohomish County, Washington. 220118
4th suspect arrested after Mountlake Terrace home robbery

Police arrested Taievion Rogers, 19, on Tuesday. Prosecutors charged his three alleged accomplices in April.

A 10 acre parcel off of Highway 99, between 240th and 242nd Street Southwest that the city of Edmonds is currently in the process of acquiring on Monday, July 10, 2023 in Edmonds, Washington. (Olivia Vanni / The Herald)
Edmonds ditches $37M Landmark public park project off Highway 99

The previous mayor envisioned parks and more in south Edmonds, in a historically neglected area. The new administration is battling budget woes.

Edmonds school official sworn in as Mount Vernon supe

Victor Vergara took his oath of office last week. He was assistant superintendent of equity and student success in Edmonds.

Big Lots announces it will shutter Everett and Lynnwood stores

Marysville store will remain open for now as declining sales and downturn in consumer spending were factors in the closures.

President Joe Biden speaks at North Carolina Agricultural and Technical State University, in Greensboro, N.C., on April 14, 2022. Biden plans to nominate Michael Barr  to be the Federal Reserve's vice chairman of supervision. The selection of Barr comes after Biden's first choice for the Fed post, Sarah Bloom Raskin, withdrew her nomination a month ago (AP Photo/Carolyn Kaster)
Washington Democrats voice support for Biden’s decision to drop out of presidential race

Some quickly endorsed Vice President Kamala Harris to replace him on the ballot.

Everett
Teenager in stable condition after Everett drive-by shooting Saturday

Major Crime Unit detectives were looking for two suspects believed to have shot the teenager in the 600 block of 124th Street SW.

Miners Complex tops 500 acres in Mount Baker-Snoqualmie National Forest.

Nine lightning-caused fires force trail closures and warnings 21 miles east of Darrington. No homes are threatened.

FILE — President Joe Biden arrives for a Medal of Honor ceremony in the East Room of the White House in Washington, July 3, 2024. Biden abandoned his campaign for a second term under intense pressure from fellow Democrats on Sunday, July 21, upending the race for the White House in a dramatic last-minute bid to find a new candidate who can stop former President Donald Trump from returning to the White House. (Doug Mills/The New York Times)
Biden drops out of race, endorses vice president Kamala Harris

The president announced the decision on social media Sunday.

A Mukilteo firefighter waves out of a fire truck. (Photo provided by Mukilteo Fire Department)
Mukilteo levy lid lift will hike average tax bill about $180 more a year

The lift will fund six more workers, ambulances, equipment and medical supplies. Opponents call it unnecessary.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.