Stocks decline on Nokia's disappointing earnings
AP Business WriterNEW YORK (AP) -- Frustrated by a still elusive business recovery, investors sold stocks lower Thursday when Nokia reported a drop in profits and sales and Advanced Micro Devices offered a weak outlook for the second quarter.
"The majority of companies are coming out with shaky news. One day they say they see signs of a turnaround, then they say, 'We were premature.' The turnaround is not coming as quickly as people thought," said Al Mirman, strategist at V Finance in Sarasota, Fla.
The market rebounded from sharper losses suffered at midday when a small plane hit a skyscraper in Milan, Italy that houses local regional government offices. Later reports indicated the crash was an accident, and that the pilot had sent out a distress call.
The Dow Jones industrial average closed down 15.50, or 0.2 percent, at 10,205.28, according to preliminary calculations. The Dow had fallen as much as 163.06 at midday when investors increased their selling based on fears of more terrorist attacks.
The broader market also retreated. The Nasdaq composite index fell 8.24, or 0.5 percent, to 1,802.43, and the Standard & Poor's 500 index slipped 1.60, or 0.1 percent, to 1,124.47.
Thursday's lackluster trading reflected the market's disappointment with first-quarter results, which so far have been tepid at best. Aside from a handful of very upbeat earnings announcements, the most positive reports have come from companies that beat previously reduced expectations and are cautiously optimistic about the future.
A lukewarm economic report failed to trigger an upturn. The Conference Board said its Index of Leading Economic Indicators -- a key gauge of the direction of the U.S. economy -- inched up 0.1 percent last month after holding steady in February.
"The economy is not deteriorating, but at the same time, we are not getting the momentum people had hoped for," Mirman said.
Among the losers, cell phone maker Nokia fell $2.53, or nearly 12.3 percent, to $18.10 after reporting first-quarter profits fell 8.5 percent and sales declined 12 percent. Nokia also reduced its sales outlook for the remainder of the year.
Chip maker AMD recorded a smaller-than-expect loss for the first quarter, but fell $2.22, or 15 percent, to $12.60 after saying it still faces tough business conditions.
AMD chief executive W. J. Sanders III said second-quarter sales will be lower than the first quarter's, and that it will be hard for AMD to continue gaining market share because the biggest growth areas in the PC market are weak spots for the company. Analysts also don't expect AMD to be profitable until the third quarter.
But the market shouldn't be surprised to see the tech and telecom sectors stumble, analysts said. After all, these areas are still suffering weak demand and inventory gluts. Because tech and telecom firms mostly sell to other businesses, they also don't benefit as much from consumer spending, which remains relatively strong.
"We have been down this road so many times before. ... I am skeptical. They all have very substantial areas of oversupply," said Richard A. Dickson, technical analyst for Hilliard Lyons.
There were also earnings-related winners Thursday. Dow industrial American Express rose $1.24 to $42.39 after reporting Thursday its profits beat projections by 3 cents a share.
And, McDonald's, also a Dow stock, climbed $1.45 to $28.61 after beating earnings expectations by 2 cents a share and saying it will surpass Wall Street's forecast for 2002.
Declining issues were nearly even with advancers on the New York Stock Exchange. Volume was moderate.
The Russell 2000 index, which tracks the performance of smaller company stocks, slipped 0.21, or 0.04 percent, to 518.56.
Overseas, Japan's Nikkei stock average finished Thursday up 0.3 percent. In Europe, France's CAC-40 slipped 0.2 percent, Britain's FT-SE 100 declined 0.7 percent, Germany's DAX index fell 1.1 percent.
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