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Wall Street's momentum fizzles again
AP Business WriterNEW YORK (AP) -- Wall Street faltered yet again Wednesday, stymied by mixed earnings reports from Intel and Boeing that failed to convince investors that the business recovery will be solid and strong enough for stock prices to go higher.
The selling, coming a day after a 207-point gain in the Dow Jones industrials and 63-point surge in the Nasdaq composite index, was the latest example of the market's inability to hold on to gains. Instead of buying on expectations of stronger profits ahead, investors pulled back and took profits.
"The market is recognizing that it may take a couple of quarters for earnings to really change," said Michael Strauss, managing director and senior economist at Commonfund. "Although we're having a lot of day-to-day volatility, on the longer scope the market is really establishing a more sideways trading pattern as this all sorts out."
The Dow closed down 80.54, or 0.8 percent, at 10,220.78, according to preliminary calculations.
Broader stock indicators also backtracked. The technology-centered Nasdaq composite index lost 5.95, or 0.3 percent, to 1,810.84, while the Standard & Poor's 500 index fell 2.28, or 0.2 percent, to 1,126.09.
Wall Street started the session focused on Federal Reserve chairman Alan Greenspan's testimony before Congress. But while the chairman said the U.S. economy's outlook was improving and that the central bank had no immediate plans to hike interest rates, his comments had little effect on stocks.
"This was exactly what the market wanted to see him say, but it wasn't a big surprise. It's a background positive," said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum.
The Fed trimmed rates 11 times in 2001 to spur growth, and has indicated that rate increases might return sometime this year.
Wall Street focused instead on earnings.
Intel rose $1.13, or 3.8 percent, to $30.64 on earning released late Tuesday that met expectations despite disappointing revenues. The market was pleased by stronger-than-expected microprocessor sales, although the chipmaker said it sees no evidence yet of a broad economic recovery.
Still, the gains were enough to spur further buying in semiconductor stocks, some of which had also turned in better than expected results. Texas Instruments, which beat forecasts Monday, rose 26 cents to $34.05, while Motorola, which also came in ahead of Wall Street estimates, soared $1.33, or 8.9 percent, to $16.33.
Blue chips were more mixed. Boeing dropped $3.33, or 6.8 percent, to $45.37 after missing analysts' estimates because of weakness in its commercial satellite operation and continuing fallout from the terrorist attacks.
Ford rose 32 cents to $16.18 on a narrower-than-expected loss and indications the automaker expected a strong year. Philip Morris dropped 29 cents at $53.07 despite the tobacco maker beating earnings estimates by a penny.
Wall Street has been monitoring first-quarter earnings reports all month in hopes they will provide proof that the business is finally emerging from recession. Economic data has been steadily improving all year, but so far most companies have been unable to project a turnaround in their own businesses. Instead, they have remained cautious.
For investors who have lost money for two straight years, that hesitancy is unnerving. As a result, stocks have generally moved lower all month. Although there have been some rallies, including Tuesday's, the gains have proved mostly unsustainable.
"Historically, coming out of a recession it takes about two quarters of growth for the earnings numbers to really pick up," Strauss, the Commonfund director said. "So the realization from late March to today has been that for a number of companies it may take a little bit longer for earnings to get better."
Indeed, nearly four months into the year, the three major indexes are still struggling. The Dow is up about 2 percent, while the S&P has lost nearly the same percentage. The Nasdaq has fared the worst, dropping almost 7.2 percent.
Advancing issues led decliners 15 to 14 on the New York Stock Exchange. Volume came to 1.08 billion shares, compared with 1.04 billion at the same point Tuesday.
The Russell 2000 index lost 4.18 to 518.77.
Overseas, Japan's Nikkei stock average rose 1.7 percent. In Europe, Germany's DAX index lost 0.5 percent, Britain's FT-SE 100 advanced 0.1 percent, and France's CAC-40 was nearly unchanged.
On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com