AP Business WriterNEW YORK (AP) -- The arrival of earnings season brought uneasiness back to Wall Street Monday with stocks closing narrowly mixed as investors awaited reports from key companies including Intel and IBM.
The session was a mild retreat from the more optimistic trading seen last week. While third-quarter results coming out this week and next are expected to be weak because of the economy's problems and the Sept. 11 terrorist attacks, analysts say investors are most concerned about what companies have to say about the future.
The Dow Jones industrial average managed a slim gain, up 3.46 at 9,347.62, in the final minutes of Monday's session, according to preliminary calculations. For much of the session the Dow was down, falling as much as 105 points in lighter-than-normal trading.
The broader market posted slight losses. The Nasdaq composite index fell 7.09 to 1,696.31 after dropping 39 earlier. The Standard & Poor's 500 index slipped 1.67 to 1,089.98, regaining most of a 13-point loss.
Analysts said the downturn wasn't surprising, and even could have been larger, given the anticipation of earnings and the market's strides since the terrorist attacks. Last week, the Dow gained 2.5 percent, the Nasdaq climbed 6.1 percent and the S&P 500 advanced 1.9 percent.
"It's earnings. ...Traders tend to not hold positions in advance of wild cards," said A.C. Moore, chief investment strategist for Dunvegan Associates in Santa Barbara, Calif. "And there are earnings this week that are important to the market: Intel, IBM, AOL (Time Warner) and Nokia."
As most major companies report earnings in the next two weeks, analysts expect sectors to fall quickly in and out of favor and the overall market to fluctuate based on how investors react to each batch of reports.
"My guess is there are going to be a number of reports in which people go, 'Wow, worse than we thought,' and there will be ones that people will say, 'Wow, I thought this would have been worse,"' said Charles H. Blood Jr., financial markets analyst at Brown Brothers Harriman & Co.
The tech sector was weakened by analysts' downgrades. J.P. Morgan cut its rating on communication chip stocks, including Altera, down $2.70 at $20.45. Lehman Brothers downgraded chip equipment makers, including Applied Materials, which fell $1.40 to $33.64.
Investors bid Intel down 62 cents to $24.38 on concerns that the battered semiconductor sector still hasn't bottomed. But IBM rose $1.16 to $102 after UBC Warburg reiterated its "strong buy" rating on the stock, calling it a good defensive buy in the uncertain economy. Both Dow industrials were scheduled to report earnings on Tuesday.
Earnings were key in trading outside of the tech sector, as well. Dutch financial services company ING Groep slid $3.80, or 13.5 percent, to $24.46 after slashing its 2001 profit forecast. Xerox stumbled 32 cents to $7.77 on a third-quarter profit warning.
But there were nearly as many winners as losers on Wall Street. Bank of America rose $2.54 to $55.55 after beating analysts' earnings estimates. Mortgage lender Fannie Mae, which also surpassed expectations, gained $1.52 to $78.95.
The Commerce Department had a slightly positive report on the economy, saying inventories dropped 0.1 percent in August, the seventh straight monthly decline, and that business sales rose by a slim 0.1 percent. But the report, issued Monday morning, failed to boost the market as economists also cautioned that unsold goods could pile up again if consumers, shaken by the terror attacks, stay away from stores.
Analysts said the market isn't paying much attention right now to economic reports, particularly those whose data precede the attacks, because investors prefer to hear what businesses themselves say. It is also harder for economic reports to convey the impact of the terrorist attacks, which have resulted in sales drops and thousands of layoffs.
"Reports from the field are going to be very valuable," Blood said. "The value of the reports goes up, because the value of macroeconomic data has gone down. We are trying to measure the impact of a non-economic event."
Declining issues barely outnumbered advancers 8 to 7 on the New York Stock Exchange. Volume was 1.01 billion shares, below the 1.33 billion shares traded Friday.
The Russell 2000 index, the barometer of smaller company stocks, rose 1.49 to 430.08.
Overseas markets were also lower Monday with Japan's Nikkei stock average dropping 1.7 percent. In Europe, Germany's DAX index lost 2.5 percent, Britain's FT-SE 100 declined 1.5 percent, and France's CAC-40 fell 2.8 percent.
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