NEW YORK (CNNfn) - U.S. stocks fell Thursday after another round of corporate profit warnings served up fresh signs that the last quarter was a tough one for doing business.
The Nasdaq composite index declined for a third straight session, hurt by a big slide in Britain's Marconi, which said slowing demand for its telecom equipment could cut this year's profit in half.
Losses spread beyond technology stocks. Federated Department Stores, the No. 6 U.S. retailer, issued a profit warning that sent fellow merchants Home Depot, Sears Roebuck and Wal-Mart Stores falling.
More than 70 companies during this holiday-shortened week readied investors for disappointments in the latest signs that the economic slowdown in the second quarter was worse than many investors expected.
"It's not just the 'new economy,' it's the 'old economy'" having problems, Arthur Cashin, head of floor trading for UBS Warburg, told CNNfn's The Money Gang.
Still, the market's focus could change Friday when the government issues its closely watched jobs report for June. Also Friday, Alcoa, the aluminum producer, becomes the first major company to release second-quarter results.
For hard-hit investors, this unofficial end of warnings season and start of earnings season can't come soon enough.
The Nasdaq fell 60.68 points, or 2.8 percent, to 2,080.12, widening this year's losses to 15.8 percent.
The Dow Jones industrial average dipped 91.25, or 0.9 percent, to 10,479.86 and is down 2.9 percent this year. Off 7.7 percent in 2001, the S&P 500 lost 15.21 to 1,219.24 Thursday
More stocks fell than rose amid light trading volume. On the New York Stock Exchange, declining issues topped advancing ones 1,696 to 1,379 as 929 million shares traded. Nasdaq losers beat winners 2,316 to 1,343 as 1.3 billion shares changed hands.
In other markets, the dollar rose against the yen and euro. Treasury securities declined.
Profit slowdown accelerates
U.S. markets reopened Thursday after the Fourth of July holiday. But a short trading week brought no relief from second-quarter profit warnings.
Marconi (MONI: down $3.68 to $3.35, Research, Estimates), the biggest loser on the Nasdaq Stock Market, cut its earnings expectations in half.
Marconi's problems spilled over to other communications equipment makers, including Ericsson (ERICY: down $0.61 to $4.93, Research, Estimates), Ciena (CIEN: down $2.49 to $34.54, Research, Estimates), and Cisco Systems (CSCO: down $1.61 to $17.58, Research, Estimates).
Parametric Technology (PMTC: down $2.24 to $10.13, Research, Estimates), which makes software, said its profit will fall short, while ASM Lithography (ASML: down $1.42 to $20.80, Research, Estimates), a maker of chip equipment, warned it will lose money for the first half of the year.
WorldCom (WCOM: down $0.19 to $14.28, Research, Estimates) , the telecom service provider, said its profit this year will miss expectations.
Companies outside of the technology sector also issued disappointments. Federated Department Stores (FD: down $2.37 to $38.01, Research, Estimates), which owns Macy's and Bloomingdale's, said its fiscal second-quarter profit could miss Wall Street forecasts by as much as 43 percent.
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Wal-Mart (WMT: down $0.62 to $48.60, Research, Estimates), Home Depot (HD: down $1.23 to $46.66, Research, Estimates), and Sears (S: down $1.21 to $41.71, Research, Estimates) all declined along with Federated. Guess (GES: down $0.13 to $7.50, Research, Estimates), the apparel maker, warned that it expects second-quarter earnings below forecasts.
On the plus side, the period for these warnings should slow and then end when companies report actual results in the weeks ahead. Any absence of bad news could help stocks.
"I think we are in the early stages of a market that is beginning to see some light at the end of the tunnel," Peter Cardillo, director of research at Westfalia Investments, told CNNfn's Before Hours.
Focus on jobs
In another positive, the National Association of Purchasing Management said its index of non-manufacturing activity rose to 52.1 in June, its highest level of the year, and a sign that the worst of the U.S. economic slowdown may have ended.
Earlier, the number of Americans filing for jobless benefits rose by 7,000 to 399,000 last week, the government said.
On Friday, the Labor Department issues its most-comprehensive look at the job market. In the report, the nation's unemployment rate is expected to have risen to 4.6 percent in June, according to economists surveyed by Briefing.com. That figure, up from 4.4 percent in May, would be the highest since March 1998, when unemployment stood at 4.7 percent.
And more people may be chasing fewer jobs. Non-farm payrolls are expected to drop by 40,000, the third straight month of declines, following a loss of 19,000 jobs in May.
Prudential Securities, Gap and Palm all announced job cuts in June, joining a long list of companies trying to cut costs as the economy slows.
Robert Goodman, chief economist at Putman Investments, said that the jobs numbers, though likely to show weakness, are also backward looking.
"Investors have to train themselves to look forward and when they do that a whole different picture emerges," Goodman told CNNfn's Street Sweep.
Alcoa (AA: up $0.53 to $40.78, Research, Estimates) kicks off the June quarter results-reporting period Friday. The No. 1 aluminum producer is expected to post earnings of 45 cents a share, according to the First Call consensus Wall Street estimate. That's down slightly from 47 cents per share in the year-earlier period.
Alcoa's slight decline is unusual. According to First Call, profits among S&P 500 companies are expected to have declined an average of 17.4 percent during the April-June period.
Not all recent warnings were punished Thursday. Shares of Honeywell International (HON: up $1.59 to $36.50, Research, Estimates), coming off a failed merger with General Electric, rose after the company said this year's profit will fall short. The diversified manufacturer also ousted CEO Michael Bonsignore on Tuesday, replacing him with Lawrence Bossidy, the former CEO of AlliedSignal, which bought Honeywell Inc. and adopted its name in 1999. 
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