NEW YORK (CNN/Money) -
U.S. stock markets tumbled Wednesday, as disappointment about Intel's mixed earnings and outlook trounced positive corporate news, including an improved forecast from McDonald's and strong earnings from Bank of America.
A steady rise in oil prices throughout the session and the morning's weaker-than-expected retail sales report added to the decline.
The Nasdaq composite (down 16.78 to 1,914.88, Charts) lost around 0.9 percent, closing just off of its lows of the session.
The Dow Jones industrial average (down 38.79 to 10,208.80, Charts) and the Standard & Poor's 500 (down 3.67 to 1,111.47, Charts) index both lost between 0.3 percent and 0.4 percent.
U.S. stocks had tumbled sharply at the open in a "sell the news" response after chip leader Intel (INTC: down $2.76 to $23.38, Research, Estimates) reported results and a forecast late Tuesday that were less bullish than some had hoped. Although tech remained weak all through the session, blue chips briefly bounced at midday, boosting the whole market, with investors nibbling at some of the morning's decliners.
But any relief from the selling was short-lived, with markets tumbling anew in the afternoon.
"It's all Intel today," said Tom Schrader, managing director of U.S. equity trading at Legg Mason.
Late Tuesday, Intel reported earnings of 27 cents per share, in line with estimates and up from 14 cents a year earlier. However, quarterly revenue and gross margins were shy of expectations.
In its outlook, Intel boosted its revenue forecast to a range that sets the midpoint higher than what analysts have been forecasting. But Intel also lowered its 2004 gross margin target, which did little to help soothe concerns that the semiconductor cycle has nearly peaked.
Shares tumbled 10.5 percent, weighing on a slew of chips and other techs.
After the close of trade, Intel rival Advanced Micro Devices (AMD: Research, Estimates) reported earnings of 9 cents per share, in line with estimates and counter to a loss a year earlier. The company also reported quarterly revenue and gross margins that surpassed expectations. Looking forward, the company said it expected sales to rise moderately. Shares initially lost 2 percent in after-hours trade before recovering.
Also after the close, Apple Computer (AAPL: Research, Estimates) reported earnings of 16 cents a share, up from 5 cents a year earlier, thanks to strong iPod sales. Shares gained 3 percent in extended-hours trade.
The earnings parade continues Thursday. Citigroup (C: Research, Estimates), Nokia (NOK: Research, Estimates) and PepsiCo (PEP: Research, Estimates) are expected to report earnings before the start of trading Thursday, but IBM (IBM: Research, Estimates) is the day's big earnings report.
Due after the close, IBM (IBM: Research, Estimates) is expected to have earned $1.12 per share, versus 97 cents a year ago.
"IBM is pretty critical," said Peter Green, technical market analyst at MKM Partners. For a detailed preview of IBM's earnings, click here.
Thursday also brings a slew of economic reports, including news on weekly jobless claims, producer prices, and the NY Empire State index before the start of trading. The Philadelphia Fed index is due at noon.
Unless there is a huge catalyst in the next few weeks, markets are likely to keep churning through the summer, said Legg Mason's Schrader.
"The problem is that we seem to keep churning down," he said. "Maybe we'll get some direction after the (Democratic and Republican) conventions are over with."
On the move
Helping tech was Juniper Networks (JNPR: up $2.59 to $24.59, Research, Estimates), the smaller rival of Internet connection gear maker Cisco Systems (CSCO: down $0.04 to $22.10, Research, Estimates). The company reported solid earnings and revenue late Tuesday that grew from a year ago and surpassed the expectations of Wall Street analysts. Shares jumped 11.7 percent and boosted others in the networking sector.
Bank of America (BAC: down $0.83 to $84.30, Research, Estimates) reported earnings per share and revenue early Wednesday that rose from a year earlier and surpassed the estimates of analysts. But the stock closed lower.
Caesars Entertainment (CZR: up $2.08 to $16.00, Research, Estimates) popped 15 percent in unusually active New York Stock Exchange trade on a Wall Street Journal report that Harrah's Entertainment (HET: down $1.00 to $50.98, Research, Estimates) is near a deal to purchase the casino operator.
Protecting the Dow from steeper losses was McDonald's (MCD: up $1.11 to $27.79, Research, Estimates), which rallied 4.2 percent after boosting its second-quarter profit forecast, thanks to stellar global demand.
Other Dow gainers included Microsoft (MSFT: up $0.53 to $28.13, Research, Estimates), Johnson & Johnson (JNJ: up $0.54 to $55.92, Research, Estimates) and General Electric (GE: up $0.29 to $33.13, Research, Estimates).
"People have been talking for some time about large-cap stocks, and that's where the money is going today," MKM's Green added. "They want to be in more secure companies that are going to benefit from global expansion."
Market breadth was negative, and volume was stronger than it has been in some time. On the New York Stock Exchange, losers edged winners by a narrow margin as 1.45 billion shares changed hands. On the Nasdaq, decliners beat advancers by more than three to two, on volume of 2.11 billion shares.
In addition to the corporate news, reinforcing the day's negative tone was the June retail sales report. Released before the open, sales fell 1.1 percent, the Commerce Department said. That compared with a rise of 1.4 percent in May and with analysts' expectations that sales would fall just 0.7 percent.
Sales excluding autos fell 0.2 percent after rising 0.9 percent in May. Economists, on average, were expecting sales to rise 0.2 percent.
Treasury prices inched lower, pushing the 10-year note yield up to 4.48 percent from 4.46 percent late Tuesday. Treasury prices and yields move in opposite directions. The dollar was weaker against the euro and higher versus the yen.
Among commodities markets, NYMEX U.S. crude oil futures added $1.61 to settle at $41.15 a barrel. COMEX gold added $3.30 to settle at $405.60 an ounce.
|
