NEW YORK (CNNfn) - U.S. stocks drifted lower Monday after a trio of Wall Street forecasters cut their outlook for corporate profits – the latest setback for investors banking on a market rebound.
But trading volume was light. The Nasdaq Stock Market posted its fourth- slowest full-day trading session of the year, a sign the selling came with little conviction.
Discouraged by the stumbling economy, UBS Warburg and Credit Suisse First Boston downwardly revised their forecasts for corporate results this year.
And J.P. Morgan Securities now sees the Standard & Poor's 500 index, the broadest of the three major market gauges, falling by 16.6 percent this year, extending last year's 10 percent decline.
"I think we are in a period of sideway (stock market) motion for awhile," said Vince Farrell, chairman of Victory SBSF Capital Management, who forecasts no quick return to the profit growth of the last 1990s.
"I think we have a ways to go on this," Farrell told CNNfn's Street Sweep. "Stocks are fully valued."
As the nation's companies wrap up their worst quarter in a decade, news from Adobe Systems didn't help. The software maker warned that sales in the current period will disappoint.
Still, health insurer Humana and Williams Cos., an energy provider, said earning rose in the second quarter and met expectations, pushing their shares higher.
The Nasdaq composite index fell 11.23 points, or 0.5 percent, to 2,017.84, breaking a three-session advance, and widening this year's loss to 18.3 percent. The Dow Jones industrial average lost 14.95 to 10.401.72 and is down 3.6 percent in 2001.
The S&P 500 declined 1.30 to 1,204.52, bringing this year's losses to 8.8 percent.
Market breadth was mixed. On the New York Stock Exchange, advancing issues beat declining ones 1,665 to 1,434 as 902 million shares traded. Nasdaq losers topped winners 1,955 to 1,702 as 1.34 billion shares changed hands, the fourth slowest full-day session of the year.
Treasury securities edged higher.
Dimmed outlook
In the most dour of the day's outlooks, Douglas Cliggott, chief investment strategist at J.P. Morgan Chase, cut his year-end target for the S&P 500 to 1,100 from 1,200, or an 8.7 percent drop from Monday's levels.
The target, if it holds, would hand the S&P 500 its first two-year stretch of losses since the early 1970s.
UBS Warburg's U.S. portfolio strategist, Ed Kerschner, reduced his 2001 earnings outlook for S&P 500 companies to $49 per share from $53 per share.
And Tom Galvin, of Credit Suisse First Boston, dropped his 2002 year-end target for the S&P 500 to 1,500 from 1,550 while cutting his earnings outlook for the companies to $51.50 a share from $55.25.
In their forecasts, both Kerschner and Galvin cited the strong dollar, which makes it tougher to sell goods abroad while hurting profits earned overseas. The dollar rose against the yen and euro Monday.
Still, Kerschner counts this period as one of the top five opportunities for buying stocks since the early 1980s, the start of big gains for the equity market. As such, he sees the S&P 500 rising to 1,835 by the end of next year, up 52 percent from Monday's close.
Adobe, Aviron among decliners
In the latest corporate disappointment, graphic design software maker Adobe Systems (ADBE: down $2.52 to $40.54, Research, Estimates) said it could have trouble reaching fiscal third-quarter revenue estimates after weaker-than-expected July sales.
More than 800 companies pre-announced disappointing results for the June quarter. And already, 220 companies have warned of shortfalls in the current quarter, which began this month.
"The earnings rebound keeps getting pushed out further," said Chuck Carlson, CEO of Horizon Publishing, who calls for a slow recovery in corporate profits.
Market "bottoms take time to form," Carlson said, adding that the market needs "some visibility on earnings."
The Nasdaq's biggest loser, biotech developer Aviron (AVIR: down $13.87 to $27.21, Research, Estimates), said it won't be able to launch its FluMist nasal spray vaccine in time for the upcoming flu season. A U.S. regulatory panel voted against recommending approval of the drug, citing safety concerns.
Tyson Foods (TSN: down $0.52 to $9.88, Research, Estimates) said its earnings fell to $19.4 million, or 9 cents a share, from $40.5 million, or 18 cents a share, a year earlier.
In a deal announced Monday, General Electric's (GE: down $1.05 to $43.60, Research, Estimates) GE Capital said it will buy financial services provider Heller Financial (HF: up $17.09 to $52.99, Research, Estimates) for $5.3 billion in cash, or $53.75 a share.
The pace of June quarter results slows to a trickle this week. But that hasn't brought an end to the indecision in the stock market, which has fallen steadily during the last 16 months. The Nasdaq stands 60 percent below last year's high.
Verizon Communications (VZ: down $0.11 to $56.02, Research, Estimates) and Walt Disney (DIS: down $0.43 to $26.60, Research, Estimates) are among the week's few high-profile profit reports. But the week's economic figures on consumer confidence, manufacturing and the job market also will be closely watched for signs of rebound.
"People want to see the recovery come all at once, and it's not going to," Liz Ann Sonders, money manager at Campbell Cowperthwait US Trust, told CNNfn's Before Hours.
Profits this year are expected to post their first decline since 1991. Still, analysts surveyed by earnings tracker First Call forecast a small earnings uptick during the final three months of the year.
Some good news came from Humana (HUM: up $0.83 to $10.13, Research, Estimates). The health insurer reported a 32 percent jump in second-quarter earnings Monday. And energy transporter and marketer Williams (WMB: up $0.06 to $33.15, Research, Estimates) posted higher quarterly earnings that topped Wall Street forecasts. 
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