Stocks fall, posting third straight loss
AP Business WriterNEW YORK (AP) -- Lower prices and a bright outlook from Amazon.com failed to sustain what had been a respectable rally on Wall Street Wednesday, and prices ended up falling for the third straight day.
It was also the market's fifth losing session in the last six. Stocks have been hard-pressed to hold on to gains amid generally lackluster earnings reports and disappointing forecasts.
"Investors just need more to be convinced. We need to see the scales tipping to profit recovery," said Jeff Kleintop, chief investment strategist for PNC Financial Services Group in Philadelphia. "Right now, we are kind of balanced between optimism about recovery and fears of backsliding back into recession."
The Dow Jones industrial average closed down 58.81, or 0.6 percent, at 10,030.43, giving back an earlier advance of 74.18, according to preliminary calculations. The Dow, which dropped 167 points the previous two sessions, on Tuesday hit its lowest close since Feb. 22 when it stood at 9,968.15.
The broader market followed the same path as the blue chips. The Nasdaq composite index fell 16.95, or 1.0 percent, to 1,713.34, having risen 16.23 earlier. The Standard & Poor's 500 index declined 7.82, or 0.7 percent, to 1,093.14 after advancing 7.50.
Kleintop attributed the late-day selloff to weak money flows from mutual fund investors, who account for many of Wall Street's largest trades. By late afternoon, institutional investors, including those who buy for mutual funds, didn't have "the fuel to go out there and buy stocks," he said.
While there was good earnings news, including that of Amazon, to hearten traders, analysts said much of the earlier upturn was based largely on lower prices following the recent selloff. For a certifiable rally, more companies must produce upbeat outlooks and profits.
"The market remains in a very nervous state. Investors are not willing to rush in. That's what this is all about," said Peter Cardillo, president and chief strategist of Global Partner Securities Inc. "The missing link for a sustained rally is earnings growth."
Indeed, the market seemed to have a hard time deciding how to react to the Commerce Department's report that orders to U.S. factories for big-ticket items fell 0.6 percent in March due to waning demand for cars and computers. It was the first such decline in four months, and worse than the flat reading analysts expected.
Computer and car makers were among Wednesday's losers. IBM fell 83 cents to $86.50, and Ford declined 23 cents to $16.22.
But the market's losses were spread across a variety of sectors. Microsoft fell 97 cents to $53.02, Citigroup stumbled 80 cents to $44.70, and Wal-Mart declined 60 cents to $57.45.
And, Exxon Mobil, which Tuesday missed first-quarter earnings expectations by 8 cents a share, fell $1.05 to $40.30.
There were few earnings-related winners, the biggest being Amazon. Investors rewarded Amazon, sending it up $2.73 to $16.79 after the Internet retailer raised its 2002 revenue estimates and posted a smaller-than-expected first-quarter loss. Additionally, sales rose 21 percent over the first quarter last year.
The market was keeping a close watch on AOL Time Warner, up 19 cents at $19.30, ahead of its earnings due later.
After the market closed, AOL reported earnings of 3 cents a share. Wall Street had expected earnings of 14 cents a share, but that number did not reflect a one-time charge of $54.2 billion to account for the decline in the company's market value since the $106 billion merger of America Online and Time Warner was announced in January 2000.
AOL said it would have met expectations were it not for the charge.
Under new accounting rules, which follow the Enron collapse, companies are no longer allowed to acknowledge the erosion of their market value, called goodwill, in smaller increments over an extended period of time. Analysts had anticipated the charge.
Declining issues led advancers slightly more than 8 to 7 on the New York Stock Exchange. Volume was relatively light.
The Russell 2000 index, which tracks the performance of smaller company stocks, fell 2.97, or 0.6 percent, to 507.32.
Overseas, Japan's Nikkei stock average finished Wednesday down 0.5 percent. In Europe, France's CAC-40 fell 0.8 percent, Germany's DAX index declined 0.6 percent, while Britain's FT-SE 100 rose 0.5 percent.
------On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com